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Landmark Judgment for Sainsbury's against Mastercard in the Supreme Court

Posted on 17 June 2020

The Sainsbury's v Mastercard claim commenced in 2012 and concerns whether the multilateral interchange fees ("MIFs") that retailers, such as Sainsbury's, paid on Mastercard card payments restricted competition. In 2016, the Competition Appeal Tribunal (the "CAT") found in Sainsbury's favour and awarded Sainsbury's £68m in damages. This was the highest competition damages award in Europe.

The case was appealed to the Court of Appeal and became jointly case managed with Sainsbury's v Visa and Asda, Argos and Morrisons v Mastercard. In addition, due to the importance of the case for the effective enforcement of EU competition laws, the EU Commission was given permission to intervene. Its submissions were aligned with those of Sainsbury's and the other retailers. In 2018 the Court of Appeal confirmed that Mastercard (and Visa) had breached EU and national competition laws.

During the four day hearing in January 2020, the Supreme Court had to consider five grounds of appeal. Sainsbury's succeeded on each of the three live issues in the Sainsbury's v Mastercard proceedings. In its judgment, the Supreme Court established that MIFs restricted competition and also confirmed the legal test that Mastercard (and Visa) would need to satisfy in order to receive an exemption from the competition rules, including the nature of the empirical evidence needed to do so. Additionally, the case sets out the legal test for establishing whether an unlawful overcharge is passed on down a distribution chain.

This case is the most significant to date as regards the enforcement of the EU and national competition laws relating to anti-competitive agreements and practices between independent businesses, here the two card schemes and the banks which issued and/or processed the card transactions. It will provide guidance for the hundreds of other business claimants behind the lead cases (many of which are represented by this Firm) and will also be relevant in some ways to the consumer class action against Mastercard in the CAT represented by Walter Merricks.

The case will now be remitted back to the CAT and for an examination of the existing evidence in relation to whether the MIFs charged by Mastercard and Visa could be exempted under competition law, and if so, at what lawful level? If there is a lawful level in relation to the claims then the basic measure of the damages owed to retailers will be the difference between that level and the rates actually paid in the claim periods, assuming that the rates paid were greater.

The core team for the case were Rob Murray and Zac O'Brien. A copy of the judgment can be found here, and the press summary can be found here.

Related Coverage

Bloomberg
Fintech Direct
Law Gazette
Law360

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