UK businesses with substantial sales via credit and debit cards could recover credit card fees totalling millions of pounds, according to commercial law firm Maclay Murray & Spens LLP (MMS).
Following a Competition Appeal Tribunal (CAT) judgment in which MasterCard was ordered to pay Sainsbury’s £68.5m for breaching competition law in its setting of multilateral interchange fees, MMS is poised to assist other merchants who may have been overcharged.
MMS believes companies across a wide range of sectors could be entitled to substantial pay-outs after being charged unfairly high merchant card fees. The claim will be funded by an investor, who will underwrite the cost of legal action.
Catriona Munro, a partner in MMS’s EU, Competition & Regulatory practice, said that although the overcharge was small as a percentage, it can add up to a lot of money over the years for businesses with substantial turnovers.
She said: “The Sainsbury’s case is the first significant judgment in UK competition law damages and it gives us a template from which we can assess who might be entitled to reclaim fees, and how to proceed.
“The CAT found that if MasterCard’s fees had complied with competition law, the interchange fees would have been 0.50% rather than 0.90% for credit cards and 0.27% rather than 0.36% for debit cards. While this might not sound like much, the Sainsbury’s award of £68.5m shows just how much these fees can amount to.
“We are currently talking to businesses that make substantial sales via credit and debit cards, with a view to advising them on whether they have been over-charged. Where we believe that is the case, we have in place a funder who is prepared to absorb the initial cost of litigation, should it prove necessary, and we can also advise on insuring against potential costs should a case fail.”
However, Munro warned that claims should be made as soon as possible, as the amount of any claim is diminishing by the day following a change in the law in December 2015.
She explained: “As claims can only be backdated six years under English law, traders’ potential claims are getting smaller every day. We believe there are many businesses in sectors such as hotels, leisure and transport that trade substantially using cards, and overcharges amount to millions of pounds, which should have been in those businesses these last few years. We urge them to get in touch so that we can determine whether they can seek redress.”
MMS reports that as well as going to court against Sainsbury’s, MasterCard is understood to have reached a multi-million pound settlement with Tesco over interchange fees, while Walter Merricks, the UK’s former chief financial services ombudsman, has brought an action against MasterCard claiming billions on behalf of UK consumers.
In recent filed accounts, MasterCard estimated that “the lower end” of a negotiated settlement with UK merchants could cost it about $300m (£245m), although it admitted that the figure may change as more traders bring legal actions.