$91 Million Fee Dispute in UK Against Mastercard Won by Sainsbury

After a long-running dispute over fees charged on card transactions with Mastercard Inc., a London Judge awarded 69 million pounds ($91 million) in compensations to J Sainsbury Plc.

According to a Competition and Appeal Tribunal judgment published on Thursday, competition was restricted by the charges put on U.K. credit and debit card transactions by Mastercard.

There have been long standing allegations against Mastercard and Visa about the fees applied by them in Europe and the UK. Users, retailers and several businesses alleged that both the credit card companies charged anti-competitive and excessive fees on debit and credit card transactions. This judgment by the London judge was welcomed by retailers and is seen as the first in a series of claims that have been brought by retailers against Mastercard and Visa. Combined damages of more than 1.2 billion pounds is being sought by the retailers according to the various suit filed against the credit card companies.

“This marks the first substantial award in a competition damages claim in the U.K., and we believe in Europe. It has an importance well beyond the precedent it sets for claims against the Mastercard and Visa schemes,” Sarah Houghton, a lawyer at Mishcon de Reya advising the supermarket chain J Sainsbury Plc told The Guardian said in an e-mail about the judgment.

Sainsbury’s overall business last year was to the tune of 23.5 billion pounds. The 69-million pound fine that was awarded to the retailer was the same as the company manages to garner through sale in a day.

To settle claims in another separate lawsuit over exorbitant fees, $61 million was agreed to be paid last year by Mastercard to U.K. supermarket Tesco Plc.

There was news articles published in the British press recently that claimed British consumers are preparing a 19 billion-pound class action lawsuit against Mastercard and the most recent ruling against the company comes amidst such reported lawsuit preparations.

According to a July 6 statement, to help draft a lawsuit they plan to file by September, Quinn Emanuel Urquhart & Sullivan LLP has been hired by Bottom of Form

Walter Merricks. He is a lawyer who once led the U.K. organization that handles consumer disputes with banks. The Consumer Rights Act 2015 would form the basis of the claim of the lawsuit and would be one of the first filed under the news act and amongst the U.K.’s biggest consumer claims made so far.

The ruling by the London judge also noted that Sainsbury, though charged higher than usual for transactions, the retailer had not passed on the costs to consumers in the form of higher prices. This note by in the judgment may have boosted Mastercard’s defense against that class action even  as the ruling resulted in compensation for Sainsbury. This was said by Mastercard in a statement.

In a BusinessWire statement that was published in Trhursday, the credit-card provider said that to cover the costs resulting from the judgment, it will take a pretax charge of about $90 million in its second quarter.

(Adapted from Bloomberg)


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