Last week the CAT handed down its second substantive judgment in the long-running Interchange Umbrella Proceedings. The judgment determines the extent of pass-on of the multilateral interchange fees (“MIFs”) set by Visa and Mastercard at two levels of the market: by acquiring banks to merchants (“Acquirer Pass-On”), and by merchants to their customers (“Merchant Pass-On”).
The judgment follows Trial 2 of the proceedings which took place between November 2024 and April 2025. Trial 2 dealt with both levels of pass-on in claims brought by thousands of merchants against Visa and Mastercard in respect of all MIFs and in the consumer class action brought by Mr Merricks against Mastercard, which was settled during Trial 2. The class representative in the CICC collective proceedings representing merchant claimants in respect of commercial card MIFs only also participated in respect of Acquirer Pass-On.
The judgment contains the most extensive analysis of pass-on issues by the CAT to date and provides important clarification of the applicable legal principles. In particular, the CAT held that to prove a pass-on defence defendants are required to show a “direct causative link” between the cost in question and downstream prices, such as direct consideration of the cost in short term price-setting processes. Influence on downstream prices via “indirect channels”, such as tracking competitors’ prices or effects on profit margin targets or investment decisions, will not amount to pass-on.
In respect of Merchant Pass-On, the Tribunal found that the Defendants had failed to show the requisite direct causative link for any of the merchant Claimants, save for Travix, WorldRemit, the underwriting part of Allianz’s business and the other Claimants operating in those merchants’ sectors. The Tribunal found that the requisite link had been shown in respect of Acquirer Pass-On and that acquirers had passed on MIFs via ‘standard/blended’ contracts at a rate of 85% and, as was common ground, via ‘IC+ and IC++’ contracts at a rate of 100%.
The Interchange Umbrella Proceedings now proceed towards Trial 3, dealing with exemption amongst other issues, and Trial 4, dealing with the remaining issues in the proceedings including those relating to ‘scheme fees’. Trial 3 has been listed for 10 weeks in autumn 2027 and Trial 4 is likely to take place in 2028.
Oscar Schonfeld represented the Merchant Claimants, instructed by Stephenson Harwood LLP and Scott+Scott UK LLP, as well as Merchant Claimants in the CICC collective proceedings in respect of Acquirer Pass-On, instructed by Harcus Parker.
Sonia Tolaney KC, Matthew Cook KC, Owain Draper and Daniel Benedyk represented Mastercard instructed by Jones Day and Freshfields LLP.
View Judgment