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Oxera expert’s analysis helps MasterCard in case against retailers

Dr Gunnar Niels of Oxera acted as economics expert for MasterCard in its successful defence against Arcadia Group, Debenhams, Morrisons and nine other retailers (Arcadia & others), who claimed that they were overcharged for credit and debit card processing fees (multilateral interchange fees) by £437m.

Hon Mr Justice Popplewell found that MasterCard’s fees were necessary for MasterCard to function, were not anticompetitive, and were set at a legal level during the claim period, except for a few transactions.

The claim by Arcadia & others is one of a number of UK retailer claims against payment card schemes, MasterCard and Visa. These claims rely on a read-across from the 2007 European Commission Decision that MasterCard’s intra-EEA interchange fees restricted competition, which was upheld by Europe’s highest court in 2014.

Justice Popplewell’s judgment contrasts the 2016 Competition Appeal Tribunal (CAT) judgment that ordered MasterCard to pay Sainsbury’s £68.6m in damages. The CAT's conclusion was based on its own counterfactual analysis, which Justice Popplewell dismissed as unrealistic following detailed factual and expert submissions.

The commercial court judge was assisted by the evidence provided by both expert economics and stated that ‘[b]oth were doing their best to assist the court with their genuine views and both provided very real assistance.’ (Paragraphs 122–114). Justice Popplewell also largely agreed with and followed the Oxera team’s innovative analysis of the exemptible level of interchange fee, which built on the academic merchant indifference test (MIT).

The full judgment is available here
Read more from GCR here