Interchange fee litigation in the UK is nothing new: the Courts have seen cases brought by individual merchants, and a collective consumer action, against Mastercard and Visa. What is new is that – subject to revised publicity notices – collective merchant proceedings are now clear to proceed. Mastercard and Visa now face claims in the UK on all fronts around interchange fees, as well as claims in other jurisdictions.
In a significant win for UK merchants, the Competition Appeal Tribunal ruled in favour of certifying a set of four collective actions – brought by proposed class representatives Commercial and Interregional Card Claims I and II Limited (“CICC I” and “CICC II”) – against Mastercard and Visa. These claims sit alongside both the individual merchant claims within the “Umbrella Proceedings” and the Merricks consumer collective action.
Friday’s ruling enables those very many UK merchants who are not in the Umbrella Proceedings, to pursue their claims for overcharge in relation to commercial cards: it gives those merchants efficient access to justice.
The Judgment
Friday’s judgment is a significant reverse to the card schemes, who in April 2023 had persuaded the Tribunal not to certify the claims. The CICC claims were then revised and – despite fervent opposition from the schemes – have now been found to meet the Tribunal’s requirements.
The Tribunal had considered that under the original applications, some merchants on so-called “blended rates” would be unable to find out if they had accepted a commercial card transaction, and so paid a corresponding multilateral interchange fee. The Tribunal also considered the applicants had not provided adequate methodology to establish a blueprint to trial. The Tribunal is now satisfied that both its concerns are met: the class, as originally defined but omitting consumer card interregional transactions, is appropriate, and the expert methodology adequate.
On class definition, the operation of the Interchange Fee Regulation (“IFR”) – in particular Article 12 – was fundamental to the Tribunal’s conclusions: that the IFR imposes an obligation on acquiring banks to provide to merchants and/or maintain records sufficient for merchants to identify the types of card transactions they processed. In support of this interpretation evidence was adduced (from merchants) about the actual operation of the IFR in relation to blended contracts. The PCRs included a final safety mechanism with evidence about information and data held by Visa and Mastercard which make it clear that, at least as a last resort, merchants could determine their position by recourse to the schemes themselves by providing the card schemes a merchant identification number (“MID”) or a card acceptor identification number (“CAID”).
On methodology, the Tribunal – having satisfied itself with the appropriateness of the revised methodology and the triability of the case – reiterated that at certification, it was not for the proposed class representative’s expert methodology to address every conceivable issue or defence which the defendants say they will or may run.
The Tribunal was reassured that multilateral interchange fees had been investigated in depth and that there would be “a workable methodology to address most [of the defendants’ core objections] because they have been considered in detail before by regulators or in trials in the courts.”
The defendants tried and failed to recycle their prior argument – already dismissed by the Tribunal and the Court of Appeal – that individual proceedings were more suitable than collective. The Tribunal held, collective proceedings are the better way of vindicating the claims of the potential class of merchants who might join the opt-in proceedings.” This followed the Court of Appeal’s finding that “… standing back… The real answer is likely to be that the [schemes] consider that individualised proceeding will be more difficult to mount and thereby fewer claims will be brought against them”. This vindicates the use of collective proceedings in complex cases involving many claimants.
The Tribunal balanced the understandable caution of the proposed class representatives about the degree of integration with the Umbrella Proceedings, and the need to avoid running the CICC claims wholly independently of them.
What happens next?
The proposed class representatives will now issue revised publicity notices showing the approved class definition. They will also need to consider how the certified claims will interact with the Umbrella Proceedings and tailor the litigation budget to suit. It will be seen to what degree these claims participate in the upcoming Umbrella Proceedings pass-on trial starting in November 2024.
Most importantly, UK merchants who have accepted commercial card payments should now register on the claims website www.commercialcardclaim.co.uk.
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