MasterCard wins ruling in legal battle over card fees

MasterCard has won a High Court legal battle against a group of retailers including Asda, Morrison, New Look and Next in connection with cross-border charges on the use of debit and credit cards, known as interchange fees.

The card issuer is fighting at least 10 separate lawsuits from retailers in the UK seeking upwards of £1.2bn in compensation over the fees.

The central issue in all the lawsuits is whether the interchange fees set by MasterCard for credit and debit card transactions by consumers are anti-competitive and infringed UK and EU law and if so by how much.

To support their claims, the retailers had relied on a 2014 decision by the European Commission in which MasterCard was found to have infringed European law by imposing various interchange fees on cross-border card transactions

In a ruling on Monday, Mr Justice Popplewell ruled in favour of MasterCard and found that the historic rates charged by the card issuer were necessary for it to function as he assessed the interchange rates that the company could have lawfully charged.

The judge said the trial was looking at a different period of time to that examined by the European Commission which had looked at the period between 1992 and 2007 and there was only “only a small period of overlap”.

“I must decide the case on the evidence before me, which is largely directed to a different period of time and a different market,” the judge said.

MasterCard said that it was “grateful” that the court had found in its favour. “In rejecting the retailers’ claims, it found that MasterCard’s interchange fees did not restrict competition and were necessary for the functioning of its payment system,” it said.

MasterCard said that the court had examined its interchange rates for the entire period of the claim. The judge had found that those rates were significantly below the lawful level of interchange that could have been charged to the retailers for those benefits, it added.

Stewarts Law, the law firm acting for the retailers, called Monday’s ruling “disappointing” and “surprising” given that the European Commission, the General Court and the Court of Justice of the European Union had all previously unanimously ruled that interchange fees were anti-competitive.

“We are reviewing the findings in detail with our clients and will be seeking leave to appeal,” it said.

The lawsuit is one of a number of legal claims which MasterCard is fighting.

In July, the Competition Appeal Tribunal ruled that MasterCard must pay £68.5m in damages to supermarket group J Sainsbury after losing a landmark competition case over interchange fees that it made on cards used by the retailer’s customers.

Other claims include a £14bn lawsuit which is being brought on behalf of up to 46m consumers for imposing card charges on consumers in what is set to be one of the UK’s first US-style class-action cases.