Default multilateral interchange fees (MIFs) imposed by Visa and Mastercard on retailers during card transactions breach EU and UK competition law, the Competition Appeal Tribunal (CAT) has ruled.

The decision is a major victory for US plaintiff class and collective action firm Scott + Scott, which is representing a portion of the 2,100 merchants who brought the action alongside Stephenson Harwood, whose clients settled their claims last year.

After a decade of litigation, including in the UK, the EU and elsewhere, various courts and tribunals have held that aspects of MIFs had an anti-competitive effect on the market. 

However, the judgment, which was published on 27 June, has found for the first time that unregulated interchange fees constitute an infringement of competition law ‘by object’ and can therefore be regarded, by their very nature, as harmful to regular competition. Before the judgment, courts had only ever found a ‘by effect’ infringement.

Notably, the tribunal held that regulatory changes – such as those introduced by the Interchange Fee Regulation (IFR) – do not eliminate the anti-competitive nature of MIFs. Even under regulation, the default MIF rules retained their restrictive character.

In a briefing on the ruling, Monckton Chambers said: “These are the first findings, in any jurisdiction, that MIFs infringe competition law by object, and the first in the UK or anywhere to address the restrictive object or effect of MIFs that have been capped by legislation or regulatory agreement.” 

Reaction

One group of claimants, represented by Stephenson Harwood partner Genevieve Quierin, settled with Visa and Mastercard last year, having taken the lead on litigation up to that point. A second group, led by Scott + Scott, brought the case to a hearing.

Writing on LinkedIn, Quierin said: “Interchange fees are an infringement of competition both pre- and post-IFR and indeed some constitute a by object infringement.” She added that the ruling was “a major step towards curbing the card schemes’ anti-competitive behaviour”.

Scott + Scott global managing partner David Scott said the judgment represented “a significant win for all merchants who have been paying excessive interchange fees to Visa and Mastercard”. 

Cian Mansfield, managing partner of Scott + Scott’s London office, added that retailers could be reassured that the CAT had recognised Visa and Mastercard’s conduct as harmful. 

Appeal

Both Visa and Mastercard said they would appeal. Visa, which was represented by Linklaters and Milbank with Brian Kennelly KC of Blackstone Chambers as counsel, said “interchange is a critical component to maintaining a secure digital payments ecosystem that benefits all parties, including consumers, merchants and banks”. 

Mastercard was represented by Jones Day alongside counsel Sonia Tolaney KC and Matthew Cook KC (both One Essex Court). It described the decision as “deeply flawed”. 

The ruling is the first of three trials examining interchange fees, with another having taken place in late 2024 and early 2025, focusing on whether any alleged overcharges are passed from merchants to consumers with a judgment expected later this year. A third trial will assess any exemptions under European law.

Legal arguments

The claimants had argued that MIFs – non-negotiable charges that form part of the service fees paid by retailers to accept card payments – constituted a restriction on competition under European law. 

They cited the 2020 Supreme Court ruling in the Sainsbury’s interchange litigation, which found that default MIFs set by Visa and Mastercard were inherently anticompetitive, restricting competition “by object”.

Visa and Mastercard had countered that MIFs supported secure payment systems and promoted competition. They argued that in a scenario where fees were negotiated, retailers might face even higher costs. 

However, the CAT sided with the claimants, finding the facts in this case closely mirrored those in the Sainsbury’s ruling. The CAT concluded that MIFs were collectively agreed upon and non-negotiable, thus anticompetitive by nature.

The tribunal rejected the defendants’ economic arguments as “unrealistic” and “irrational”, favouring the claimants’ evidence.

The claimants also argued that inter-regional and commercial card MIFs were similarly anticompetitive. The CAT ultimately agreed that these fees also infringed competition law.

While the tribunal was largely unanimous, it acknowledged some differences in reasoning among its members – the judgment contained concurrent opinions from all three tribunal members, who included former CAT president Mr Justice Marcus Smith. 

As former Ashurst chairman, Ben Tidswell, put it: “The tribunal is unanimous in its answers to most of the questions before us. However, there are differences between us in relation to the route by which various outcomes are reached and, in some cases, as to the outcome itself.”

The ruling reinforces the legal view that default MIFs, by their very structure and application, hinder competition and are therefore unlawful under EU competition law.