Sainsbury's Supermarkets Ltd v Visa Europe Services LLC & Anor

A multilateral interchange fee does not restrict competition under Article 101(1) merely because it increases merchants’ costs or creates a price floor. The comparison must be with a realistic counterfactual showing how competition would operate without the fee. Where the evidence establishes that a scheme’s default settlement rule would produce the same competitive process and outcome in the absence of a multilateral fee, no restriction of competition is shown. The counterfactual should generally be symmetrical where competing payment schemes operate under the same commercial model. The ancillary-restraint defence is assessed separately and strictly: the restraint must be objectively necessary for the main operation, not merely useful or necessary for the particular scheme to compete with a rival.

Sainsbury’s, a merchant accepting Visa cards, challenged Visa’s UK multilateral interchange fees as contrary to Article 101(1) TFEU and section 2 of the Competition Act 1998. It sought damages for alleged overpayments. Visa argued that the fees did not restrict competition and, alternatively, were objectively necessary for the operation and survival of the Visa scheme.

The trial followed related decisions concerning MasterCard, including the CAT Judgment in Sainsbury’s v MasterCard [2016] CAT 11 and the judgment in Asda v MasterCard. The central issue was whether Visa’s UK MIFs restricted competition in the acquiring market when compared with a realistic no-MIF counterfactual involving settlement at par.

1. Claim dismissed. Visa’s UK MIFs did not restrict competition within Article 101(1), and Sainsbury’s claim therefore failed in its entirety.
2. Article 101(1) addresses the effect of an agreement on competition, not merely its effect on prices. A higher merchant service charge is not itself proof of restricted competition. The relevant comparison is with the actual legal and economic context in which competition would operate absent the agreement.
3. The appropriate counterfactual was a no-MIF scheme with default settlement at par and no ex post pricing. The evidence, including the unanimous expert evidence, established that bilateral interchange fees would not emerge. The same market forces would therefore prevent departure from the default in both the actual scheme and the counterfactual. A zero MIF and settlement at par were economically, legally and practically equivalent.
4. Concepts such as an imposed fee or a price floor did not demonstrate a difference in competitive process. Any default settlement rule creates a floor and ceiling for the interchange-fee element of the merchant service charge. The fact that a positive MIF produced a higher fee did not establish a restriction of competition.
5. The MasterCard decisions did not establish that MIFs were inherently restrictive. Their conclusions depended on factual findings that bilateral negotiations would occur in the relevant counterfactual. Those findings did not govern the different evidence in the present case. The realistic counterfactual was symmetrical, since Visa and MasterCard operated competing schemes using the same basic model.
6. As an alternative, the court held that the MIFs would not have been objectively necessary. The ancillary-restraint test requires the restraint to be essential to the operation of the main, non-restrictive transaction, not merely helpful to the scheme’s competitive position. A four-party payment scheme could operate without MIFs, and competition with a rival scheme did not make them objectively necessary.
7. The court did not determine the Article 101(3) exemption issues, but proposed to address them in a further judgment if required.