Mastercard settles merchant group action in interchange fee litigation

Confidential settlement struck with more than 1,900 businesses


Global financial services provider Mastercard is understood to have settled a class action brought against it by more than 1,900 businesses as part of the ongoing interchange fee litigation.

The Global Legal Post has learned that settlement was agreed in the past week between Mastercard, represented by Jones Day, and the merchant claimants, represented by Stephenson Harwood.

In terms of the number of claimants involved, it is the most significant settlement to date in the ongoing litigation relating to alleged overcharging of credit and debit card fees from 1992 onwards.

The claim – part of the Merchant Interchange Umbrella Proceedings before the Competition Appeal Tribunal (CAT) – involved more than 1,900 businesses. These include renowned brands such as IHG Hotels, Hilton Hotels and clothing retailers Levi Strauss and Boohoo, alongside other high street retailers, hotel operators, telecoms, ticketing, betting, gaming and financial services companies as well as universities and charities.

The claims relate to card transaction fees which were found to infringe competition law by the European Commission in 2007, and subsequently by the UK’s Supreme Court in 2020.

Stephenson Harwood’s linked proceedings against Visa, represented by Linklaters and Milbank, in the umbrella litigation continue, while other merchant challenges against Visa and Mastercard also remain active. These include claims brought by Primark and Allianz as well as another claimant group represented by the law firm Scott & Scott.

The settlement follows a trial on liability issues before CAT which took place over seven weeks between the beginning of February and the end of March this year and from which judgment is presently awaited.

There were also hearings in January and April 2024 on quantitative and qualitative evidence for use in a second trial listed to commence in mid-November. It is set to last a further seven weeks and will focus on the highly contentious issue of the extent to which transaction fees were passed-on to consumers by merchants.

In May, former Financial Services Ombudsman Walter Merricks, who is bringing a consumer claim against Mastercard on behalf of an estimated 46 million consumers, was admitted as an active litigant to the umbrella litigation so that the pass-on fee issue could be determined across both the merchant and the consumer classes.

The umbrella litigation is being heard by CAT president Sir Marcus Smith, with former Ashurst chairman Ben Tidswell and economist Professor Michael Waterson.

The Stephenson Harwood team advising on the settled claim is led by partners Donna Newman and Genevieve Quierin, who instructed Kieron Beal KC of Blackstone Chambers and Philip Moser KC of Monckton Chambers as lead co-counsel, with juniors from their respective sets as well as 11KBW. Economists from Compass Lexicon and accountants Punter Southall have also been acting as advisers.

Mastercard is being advised by a team from Jones Day led by Nicholas Cotter. Sonia Tolaney KC, co-head of One Essex Court, and colleague Matthew Cook KC, are the lead counsel.

Last December, disputes firm Humphries Kerstetter settled the claims of around 700 merchant claimants against Visa and Mastercard on confidential terms. Earlier it had settled separate claims by Tesco and WH Smith.

In a major development in the multitracked interchange fee litigation, earlier this month the CAT ruled in favour of certifying a set of four collective actions against Mastercard and Visa brought by London disputes firm Harcus Parker on behalf of businesses accepting payments by credit and debit cards, thereby allowing merchants who are not involved in the umbrella proceedings to pursue claims. 

Earlier this month, Reuters reported that a landmark $30bn US antitrust settlement agreed by Visa and Mastercard to limit credit and debit card fees for merchants was in peril, after a New York judge signalled she was preparing to reject the agreement.

Earlier this month, meanwhile, Willkie Farr’s Boris Bronfentrinker, lead partner on the Merricks Mastercard litigation, announced proceedings against Amazon worth £1bn on behalf of independent British retailers over alleged misuse of data. 

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