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Today, the CAT handed down judgment following the first trial in the Merchant Interchange Fee Umbrella Proceedings, which concerned whether Mastercard and Visa’s current and historic scheme rules infringe Article 101(1) TFEU and/or the Chapter I Prohibition of the Competition Act 1998. Damages claims, some of which have settled since the trial, were brought on behalf of over 2000 merchants, with a combined value in excess of 1 billion.
The judgment unanimously finds that the “Default Interchange Fee Rule”, by which each of Visa and Mastercard imposes a default charge (multilateral interchange fee / “MIF”) on every transaction by a payment card bearing their brand, is an infringement of UK and EU competition law by object in situations where the level of the MIF is not capped by regulation or by agreement with the European Commission. An infringement by object means that that Rule, by its very nature, reveals a sufficient degree of harm to competition such that it is not necessary to examine its effects. The majority further found that, although MIFs did not amount to an object restriction in situations where the level of the MIF is capped by legislation or regulatory agreement, they nonetheless infringe Article 101(1) and Chapter I by effect. Smith J’s minority judgment found that the Default Interchange Fee Rule was infringing by object at all material times, irrespective of regulation.
The relevant restriction of competition takes place on the market for acquiring payments, on which acquirers compete for contracts with merchants. Under those contracts, merchants pay acquirers a merchant service charge (“MSC”) in return for the services by which the merchant, via the acquirer, receives payment from the bank which issues the cardholder’s card. The CAT found that Visa and Mastercard’s default charge, the MIF, sets a “floor” to, or constitutes a non-negotiable element of, the MSC. Accordingly, competition between acquirers is restricted.
These are the first findings, in any jurisdiction, that MIFs infringe competition law by object and the first in the UK or anywhere to deal with the restrictive object or effect of MIFs which have been capped by legislation or regulatory agreement. In the prior Sainsbury’s litigation, the UK Supreme Court upheld findings that the domestic consumer and/or Intra-EEA consumer MIFs which applied prior to the EU’s Interchange Fee Regulation (IFR) (which capped those MIFs) infringed Article 101(1) by effect. The CAT’s judgment today extends those findings to findings of object infringement, while making further findings of infringement by object or effect in respect of the uncapped default MIFs applying to commercial card and inter-regional consumer card transactions, and in respect of MIFs capped under the IFR regime and pursuant to certain commitments given by Visa and Mastercard to the European Commission.
Specifically, the CAT found that:
The Umbrella Proceedings are ongoing. Trial 2, concerning the pass-on of the MIF from acquirers to merchants and from merchants to consumers, took place in late 2024 and early 2025, with judgment expected in due course. A further trial will deal with exemption under Article 101(3) TFEU.
Philip Woolfe KC and Antonia Fitzpatrick acted in Trial 1 for the successful merchant claimants, instructed by Stephenson Harwood LLP and Scott + Scott UK LLP
The judgment is available here.