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£19bn Consumer Claim Against MasterCard Boosted by Sainsbury’s Court Victory

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Walter Merricks, the proposed consumer representative in the collective consumer claim, and Quinn Emanuel welcome the decision of the Competition Appeal Tribunal in the claim between J Sainsbury’s and MasterCard, where the Tribunal found that MasterCard imposed unlawful card fees in the UK. 

Since our announcement last week that a collective consumer claim would be brought against MasterCard, there have been two main issues raised by MasterCard:
1) That there is no finding of any unlawful fee on domestic transactions. There is now a clear finding on this by the Tribunal;

2) That there is no harm to merchants and consumers because of the benefits cards bring and that they are cheaper than cash. The Tribunal has rejected that argument also.
These findings are what we expected and support the claim Mr Merricks will be bringing on behalf of consumers. The Tribunal also noted that the card fee is a cost imposed on all retailers, and the Tribunal accepted that retailers would seek to recover this cost from their customers.
The Tribunal stated “Sainsbury’s would have passed on to consumers what it could, made whatever cost-savings it could and – to the extent that its draft Budget returned a profit that was different to market expectations – adjusted its spending (e.g. by cutting back on or expanding capital projects) so as to return the expected profit” and it also expressly indicated that “[we] agree that the likelihood that the UK MIF would be passed on increases because it is a cost that is (to put it neutrally) not insignificant and, moreover, is one that is monitored by Sainsbury’s (and no doubt by its rivals)”.
Relevantly, the Tribunal stated that, “If Sainsbury’s did not seek to recover the inevitable costs of its business from its customers, it would rapidly lose more than it made, and become an ex-business.”
Mr Merricks comments, “These are all statement that I agree with, and they support the consumer claim. However, despite MasterCard seeking to persuade the Tribunal that J Sainsbury’s suffered no loss because the unlawful card fees were passed to consumers, it failed to meet the legal test. This was MasterCard’s failing and the Tribunal stated that MasterCard could not “identify any purchaser or class of purchasers of Sainsbury’s to whom the overcharge has been passed who would be in a position to claim damages.”
Mr Merricks adds, “I am bringing the claim on behalf of the class of UK consumers to whom the overcharge was passed on, and we are in a position to claim damages.”
Mr Merricks believes that the judgment of the Tribunal is beneficial and supportive of the claim he will be filing shortly on behalf of UK consumers and is confident that, despite MasterCard’s failure to show that the unlawful domestic card fees were passed on to consumers (perhaps because MasterCard was concerned about making concessions that would help the consumer claim), this will not limit the ability of the consumer claim to succeed.
It is also important to note that today’s judgment of the Tribunal relates to unlawful domestic fees for the period since 2006, and therefore only just overlaps with the consumer claim period of 1992 to 2008.  This means there is no reason why the Tribunal cannot make a finding in the consumer claim, based on the evidence Mr Merricks will present, that is different to what it has decided in its decision handed down today. The judgment does not in any way affect the significant volume of cross border fees that the European Commission found to be unlawfully high.
The collective claim on behalf of consumers will be filed as planned.


Notes to Editors

Media contacts

Boris Bronfentrinker, Partner, Quinn Emanuel
+44 (0) 20 7653 2090

To arrange an interview with Walter Merricks, or for further background on the story, please contact:

James Baxter, Director, JBM
+44 7711 486394