Musgrave joining legal action seeking compensation from Visa and Mastercard

British courts ruled ‘interchange fees’ imposed by Visa and Mastercard on retailers for every card transaction were breach of competition laws

SuperValu and Centra franchise owner Musgrave is joining a legal action seeking compensation from Visa and Mastercard for charging fees in breach of competition laws.

British courts ruled last year that so-called interchange fees imposed by Visa and Mastercard on retailers for every card transaction were a breach of both EU and UK competition laws.

Musgrave has told its retail franchise partners that it is joining a legal action seeking compensation from the two card companies for the fees, following the precedent set by the original case, which was taken by British chain Sainsbury’s and others.

Several retail groups are taking the claim in the British courts. Law firm Stephenson Harwood and consultants CMS Payments Intelligence (CMSPI) are advising the plaintiffs. Musgrave did not name its fellow litigants.


UK courts

The Irish group is opting to take the claim in the UK courts as it believes this gives it the best chance of receiving compensation for paying anticompetitive interchange fees.

The original ruling in the Sainsbury’s case, which established that the interchange fees were uncompetitive, covers a period when the UK was still part of the EU. The judgment notes that the British court is bound to follow European law.

Musgrave is inviting franchise partners to join the action, but stresses that each needs to decide for themselves whether they want to participate. The company notes that it cannot give legal advice or direction in relation to this decision.

“There will be no upfront costs for joining the claim, or costs if the claim is not successful in achieving a settlement. However, all parties to this class action will pay fees in line with those agreed with both CMSPI (payment specialists) and Stephenson Harwood (law firm) in the event of a successful claim,” Musgrave says.

It adds that the fees are expected to be no greater than 40 per cent of any settlement received from the card companies.

Musgrave cautions that there could be an industry-wide compensation scheme in the future but joining the class action would rule retailers out of taking part in any such programme.

“However, we are currently not aware of any such redress compensation scheme being proposed or planned,” Musgrave adds.

EU law

Musgrave's brands include SuperValu, Centra, Mace, Donnybrook Fair, La Rousse and others. The group is one of the biggest players in the Irish grocery market.

In 2020, the UK supreme court held that interchange fees charged by Visa Europe Services LLC and Mastercard Incorporated were an unlawful restriction of competition under article 101(1) of the Treaty of the Functioning of the European Union. This bans agreements that prevent, restrict or distort competition.

The ruling upheld a 2018 finding by the UK court of appeal in a case taken by Sainsbury's, Asda, Argos and Morrisons against the two card companies, which ran for several years.

The judgment followed a ruling by the Court of Justice of the European Union, which in turn upheld a decision by the European Commission that the fees were unlawful.

Banks which issued cards to consumers charged multi-lateral interchange fees on each transaction. The retailer’s bank paid the fee, charging it back to the retailer, which bore the cost.

The British court found that, as the interchange fee was set by a collective decision between the banks and card companies, rather than by competition in the market, retailers could not negotiate with their own banks to reduce the charge. Thus the system breached EU and UK competition law.

Musgrave said at the weekend that it did not comment on legal matters.

Barry O'Halloran

Barry O'Halloran

Barry O’Halloran covers energy, construction, insolvency, and gaming and betting, among other areas