Retailers have often found acceptance of credit card payments in stores and online to impact on their margins. Finally some good news has come out of the various challenges made by many retailers to multilateral interchange fees (MIFs) set by MasterCard and Visa. This looks set to clear the way for payments on these back to the retailers through claims they have been mounting.
In a much hoped for judgment handed down yesterday in the Supreme Court, the final appeal court in the UK, the Supreme Court has decided that the UK courts have found that UK MIFs set by MasterCard restrict competition by their effect, and are unlawful and distorted fair competition in the UK market. There were a number of technical issues decided by the Supreme Court in favour of retailers, but, in short, the decision was clear and welcome victory for retailers against the card companies.
The effect of the Supreme Court decision is that cases involving Sainsbury’s will now go back to the Competition Appeal Tribunal to be reconsidered. Other retailers, however, won their cross-appeal claim against MasterCard. They therefore move on now to decide the quantum of their claims.
Is it all plain sailing? Perhaps not, as the Supreme Court decision does not mean that all claims will automatically succeed on liability against MasterCard or Visa. It is open to the card schemes to adduce whatever evidence they wish in other claims against them in an attempt to shore up their case on “exemption” (one of the technical issues) if and when other claims proceed. So, retailers still need legal advice and support.
The other point which the Supreme Court has clarified relates to “pass-on” which has been the subject of much debate. It has now been confirmed that the legal burden rests with the card schemes, but that the retailers will have an evidential burden of providing evidence as to how they have dealt with the recovery of their costs in their business. It is important to note also that pass-on in the form of higher prices is not the limit of the mitigation argument open to the schemes: the court has said that to the extent that the merchant had by reducing the cost of its supplies or by the pass-on of the cost to its customers all or part of its loss to others, its true loss would not be the prima facie measure of the overcharge but a lesser sum. So, quantum battles may still be in the offing.