Mastercard, Visa can challenge UK ruling on antitrust breach of merchant fees

• The Competition Appeal Tribunal previously ruled that Visa and Mastercard's commercial card and inter-regional multilateral interchange fees infringed competition law in cases brought by hundreds of merchants
• This was the first time these specific types of interchange fees had been found to violate competition law
• Both companies defend the fees as providing benefits to consumers, businesses, and banks, while merchant lawyers expressed confidence in resisting the appeal

Summary

Key Development:

London's Court of Appeal ruled on March 16 that Visa and Mastercard can challenge a Competition Appeal Tribunal judgment that found their default multilateral interchange fees (MIFs) charged to retailers violate European competition law. The appeal permission was granted in linked lawsuits brought by hundreds of merchants.

Legal Significance:

This represents a continuation of a long-running legal battle over interchange fees. The initial tribunal ruling marked the first time Visa and Mastercard's commercial card and inter-regional multilateral interchange fees were found to breach competition law.

Company Response:

Both payment giants welcomed the Court of Appeal's decision, issuing separate statements defending interchange fees as playing an important role in the digital payments ecosystem. The companies argue these fees provide benefits to consumers, businesses, and banks.

Claimant Position:

Cian Mansfield from law firm Scott+Scott, representing the merchant claimants, expressed confidence in successfully resisting the appeal at the substantive hearing stage.

Market Context:

The case centers on MIFs, which are fees charged to retailers for processing card transactions. These fees have been a contentious competition issue in the payments industry, affecting cost structures for merchants across various sectors.

Outlook:

The appeal will proceed to a substantive hearing, extending the legal uncertainty around interchange fee practices in the UK market. The outcome could have significant implications for payment processing costs borne by retailers and the revenue models of major card networks.