Press Release

Morgan Lewis Wins Landmark Interchange Fee Litigation Victory in UK Supreme Court

June 17, 2020

Morgan Lewis has scored a landmark victory in the UK Supreme Court for Sainsbury’s (a major British retailer) against the payment card company Visa. Prior to the relevant proceedings there had been no English or European ruling that Visa’s multilateral interchange fee is a restriction of competition.

On 17 June 2020, the UK Supreme Court handed down its judgment in the appeals on the lawfulness of multilateral interchange fees, or swipe fees, (MIFs) in Sainsbury’s Supermarkets Ltd (Respondent) v Visa Europe Services LLC and Others (Appellants) and Sainsbury’s Supermarkets Ltd and Others (Respondents) v MasterCard Incorporated and Others (Appellants).[1]

In a landmark victory for Sainsbury’s (a major British retailer), the Supreme Court upheld the finding of the Court of Appeal in July 2018[2] that the default UK MIFs charged within the Visa and MasterCard payment card schemes was an unlawful restriction of competition under Article 101(1) of the Treaty of the Functioning of the European Union and Chapter I of the UK Competition Act 1998.

The proceedings against Visa are unprecedented.  The Visa and the MasterCard schemes have been subject to scrutiny by the European Commission and national competition authorities and regulators over many years. However, whilst MasterCard’s MIFs have previously been found to contravene EU competition law, notably by the Court of Justice of the European Union in September 2014,[3] Visa offered Commitments to the European Commission to reduce the level of its MIFs in order to address the European Commission’s concerns. Accordingly, in relation to Visa, prior to the Court of Appeal's judgment in July 2018 there had been no English or European judgment against it that its MIFs were anti-competitive. The June 2020 judgment by the Supreme Court, confirming that the MIFs in issue restricted competition within the meaning of Article 101(1) and, therefore, are unlawful unless exempted under Article 101(3), is a landmark victory for any and all merchants who may have incurred unlawful interchange charges imposed upon them in the UK by the Visa and MasterCard payment card schemes.

Sainsbury’s will now be seeking to recover the full amount of the unlawful charge it has incurred, namely the MIF, from Visa and MasterCard.

The Supreme Court’s judgment will have significant implications for the payment card schemes which now have a competition infringement finding against them in relation to their interchange fees from the highest court in the United Kingdom.


The MIF is charged by Visa and MasterCard every time a customer uses a payment card to make a purchase. The MIF is charged by the cardholder’s bank to the merchant’s bank, and is ultimately passed on to the merchant. Under the Visa and MasterCard payment card schemes, merchants’ banks contract with each merchant on the basis that the merchant’s bank will pay the merchant the value of a cardholder’s transaction minus a merchant’s service charge that usually includes (1) the MIF, (2) the scheme fee payable by the merchant’s bank to the relevant scheme, and (3) the merchant’s bank margin. The level of the MIF, which for the relevant period comprised ca. 90% of the merchants’ service charge, is agreed between the cardholders’ banks and the merchants’ banks that are members of the respective schemes.

Even though the UK litigation is stand-alone, it emanates from the European Commission’s investigations into the MasterCard and Visa European Economic Area (EEA) MIF over the past 30 years, resulting in the European Commission’s 2007 infringement decision against MasterCard (which was upheld by the General Court and the Court of Justice of the European Union (European Courts)), the Commitments entered into by Visa to reduce the level of its EEA MIF in 2010 and 2014, the European Commission’s 2015 Interchange Fee Regulation which capped the payment schemes’ EEA MIFs, and the investigation by the European Commission in respect of the schemes’ inter-regional MIFs that culminated in 2019 in Commitments by MasterCard and Visa.


These appeals are among the most significant antitrust cases in the United Kingdom to date. They tested the circumstances in which the English courts are bound by judgments of the European Courts; whether the standard of proof is reserved for national law; the type of evidence that is required to meet the standard of proof under English law with regard to Article 101(3); the basis upon which an agreement that is restrictive of competition under Article 101(1) can be exempted under Article 101(3) provided it satisfies certain conditions; how damages are to be assessed; and the principle of finality in litigation.

The Supreme Court’s judgment has been eagerly awaited including by the scores of claimants whose proceedings have been stayed pending the outcome of these lead cases. The fact that in relation to AAM V MasterCard[4] the Supreme Court determined that there was no level of MasterCard MIF that was permissible under competition law, means there will be scores of companies who will want to be compensated for the overcharge they have been paying MasterCard.

Moreover, the appeals turn on points of material importance in competition law damages claims, and are of a much wider significance, including with regard to a collective damages action brought against MasterCard on behalf of UK consumers under the United Kingdom's "opt out" regime.[5]

The Supreme Court has definitively ruled that the Visa and MasterCard UK MIFs were a restriction of competition by effect under Article 101(1).  In this regard, the Supreme Court upheld the Court of Appeal’s finding that it was bound to follow the judgement of the Court of Justice of the European Union that MasterCard’s MIFs restricted competition. This includes because the MIF is determined by a collective decision between banks; it has the effect of setting a minimum price floor for the merchants’ service charge to the merchants; and the non-negotiable MIF element of the merchants’ service charge is set by a decision rather than by competition. The Supreme Court re-affirmed that the vice of the MIF is not based on the premise that high prices in themselves constitute an infringement of Article 101(1), it is based on the fact that the high prices arise as the result of a collective decision between banks, which limits the pressure that merchants would otherwise be able to exert on merchants’ banks to reduce the price.

In terms of the binding nature of judgments by the European Courts, the Supreme Court determined that whether or not a judgment of the European Courts is binding depends upon whether the findings upon which that decision is based are materially distinguishable from those made or accepted in the case before the English courts. The Supreme Court said that in its judgment, the essential factual basis upon which the European Courts held that there was a restriction on competition with regard to the relevant MasterCard MIF was mirrored in these proceedings. It also said, however, that even if it had not been bound, the Supreme Court would nevertheless have concluded that Visa’s and MasterCard’s MIFs restrict competition.

In relation to the standard of proof, the Supreme Court said that the applicable standard of proof was the usual civil standard of the balance of probabilities, but that the nature of the evidence which will satisfy that standard must be informed by EU law and Commission decisional practice. Accordingly, the nature of the evidence which will satisfy that standard of proof must take account of the substantive requirements of Article 101(3).  In this regard, the Supreme Court determined that the type of evidence needed to establish that the benefits from the MIF rules under consideration outweigh the detriments to merchants and are indispensable for achieving those benefits, is robust, cogent, factual and empirical evidence. Economic modelling and assumptions are not sufficient.  

In relation to the question whether an agreement, decision or concerted practice which is restrictive of competition is exempted from the prohibition imposed by Article 101(1), that requires an assessment under Article 101(3), under which it will be exempted provided that four cumulative conditions are satisfied. It is the second of those conditions which was in issue in these proceedings, namely that consumers must receive a fair share of the benefits resulting from the restriction of competition (in this case, the MIF). The Supreme Court dismissed Visa’s argument and determined that for the second condition to be satisfied in the two-sided market, the disadvantages suffered by the merchants must be counterbalanced by advantages benefiting them, the merchants.  Accordingly, any resulting benefits to cardholders from the MIF are not relevant.

In relation to the assessment of damages, the matter in issue concerned the degree of precision that is required in the quantification of mitigation of loss where a defendant to a claim for damages arising out of a breach of competition law asserts that the claimant has mitigated its loss through the “passing on” of all or part of an overcharge to its own customers.  The Supreme Court determined that the law requires no greater precision in the quantification of pass-on from the defendant that from a claimant seeking to quantify damages.  

In relation to the AAM proceedings, the Court of Appeal determined that MasterCard’s MIF restricted competition and that MasterCard had not shown that its MIF satisfied the four conditions for exemption. Despite reaching this conclusion, the Court of Appeal made an order remitting the AAM proceedings to the CAT, alongside the two sets of proceedings by Sainsbury’s against Visa and MasterCard, for reconsideration of whether MasterCard’s case under Article 101(3) in the AAM proceedings should have succeeded in whole or in part. The Supreme Court determined that having rightly decided that MasterCard’s MIF was restrictive of competition and not exempt under Article 101(3), it was not open to the Court of Appeal to order that the Article 101(3) issue should be remitted for reconsideration and hence permit it to be re-opened by MasterCard. The Supreme Court said this would offend against the principle of finality in litigation.


The appeals will be remitted to the Competition Appeal Tribunal (“CAT”) for reconsideration of the evidence on the issue of exemption under Article 101(3) and for the assessment of the quantum of Sainsbury’s respective claims against Visa and MasterCard.

The remittal hearings will be for reconsideration of the evidence on exemption only and not for a retrial. Both the Court of Appeal and the Supreme Court have made it clear that it is not open to any party to advance a new case or to adduce fresh evidence on the remittals for reconsideration. 

[Sainsbury’s was represented in its claim against Visa by Morgan, Lewis & Bockius UK LLP, led by Managing Partner, Frances Murphy with the assistance of Partner, Joanna Christoforou and Associate, Emma Walsh. Counsel team was led by Mark Brealey QC (Monkton Chambers), with the assistance of Derek Spitz (One Essex Court) and Sarah Love (Brick Court)]

The Supreme Court’s judgment can be found here.

[1] [2020] UKSC 24.

[2] Judgment of the UK Court of Appeal in Sainsbury’s Supermarkets Ltd (Claimant/Respondent) v MasterCard Incorporated and Others (Defendants/Respondents), Asda Stores Limited and Others (Claimant/Appellants) v  MasterCard Incorporated and Others (Defendants/Respondents) and Sainsbury’s Supermarkets Ltd (Claimant/Appellant) v Visa Europe Services LLC and Others (Defendant/Respondents) ([2018] EWCA Civ 1536), 4 July 2018.

[3] Case C-382/12 P - MasterCard and Others v Commission, Judgment of the European Court of Justice (Third Chamber) ([2014] 5 CLMR 23), 11 September 2014.

[4] AAM are collectively the retailers Asda Stores Ltd, Argos Ltd and WM Morrison Supermarkets plc.

[5] Walter Hugh Merricks CBE v MasterCard Inc and Others.  Section 47B of the UK Competition Act allows representative litigants to apply to the UK Competition Appeal Tribunal to bring proceedings for damages on an ‘opt out’ basis on behalf of a class of claimants.