High Court dismisses MasterCard’s stay application in interchange fee litigation

07/05/13

On 4 May 2012 Mr Justice Field handed down judgment in WM Morrison Supermarkets plc and others v MasterCard Incorporated and others [2013] EWHC 1071 (Comm), dismissing an application by a number of the defendants within the MasterCard group for an immediate stay of the proceedings until a related appeal which is currently pending before the Court of Justice of the European Union ("CJEU") has been determined.

In these proceedings Morrisons and eleven other high-street retailers are claiming damages against various MasterCard entities and also MasterCard UK Members Forum Limited ("MMF") in respect of losses allegedly suffered as a result of the arrangements for the setting of multi-lateral interchange fees ("MIFs") on MasterCard transactions from 1992 onwards.  Interchange fees are fees paid on payment card transactions by acquiring banks to issuing banks and MIFs are those fees which apply by default between issuers and acquirers in the absence of a bilateral agreement.  The Claimants allege that the MasterCard arrangements infringed both European and UK competition law and they are claiming damages in the total sum of nearly £400 million, thereby making this one of the largest private damages actions ever to have been brought before the English courts.

The arrangements for setting the European and UK MIFs have been the subject of various regulatory investigations and proceedings over many years.  In September 2005 the OFT adopted an infringement decision in respect of the UK MIF but that was subsequently overturned by the Competition Appeal Tribunal in June 2006.  Separately, in December 2007 the European Commission adopted an infringement decision concerning the European MIF.

The Commission Decision was addressed to various MasterCard entities which, having appealed unsuccessfully to the General Court, are now appealing against it to the CJEU.  Since the Claimants' pleaded case in respect of the European MIF is a "follow on action", the MasterCard defendants applied to the High Court for an immediate stay of the proceedings until the determination of the CJEU appeal.

In his judgment, however, Mr Justice Field dismissed the application in light of the principles that were established by the Chancellor in National Grid Electricity Transmission plc v ABB Limited and others [2009] EWHC 1326.  In particular, the Judge held that although a stay would be necessary at some stage before trial, nevertheless the MasterCard Defendants ought to be required to plead their Defences because (a) the costs of doing so are relatively modest, (b) the anti-competitive behaviour complained of began as long ago as 1992 and therefore "there is a pressing need to get on with this litigation", and (c) even if the Commission Decision is annulled by the CJEU there is an appreciable chance that the claim in respect of the UK MIF will continue in any event so that the risk that the MasterCard Defendants "might incur wasted costs and expend wasted time for which they are not fully compensated is not compellingly high".

The judgment is here.