29 Jun 2020 Cases

Expert’s Economic Evidence is Relied Upon in Landmark Supreme Court Judgment in the Interchange Fee Litigation

2 minute read


On 17 June 2020, the UK Supreme Court issued a landmark judgment in relation to three sets of proceedings involving Mastercard, Visa and various claimant retailers. The judgment found in favor of Compass Lexecon’s retailer clients, drawing on analysis provided by Compass Lexecon expert Neil Dryden.

The appeal concerned aspects of the analysis of restriction of competition under Article 101(1) TFEU and of efficiencies under Article 101(3) TFEU, applied to interchange fees.

In two previous cases at the High Court, Neil Dryden gave extensive evidence, contested by the card schemes, that the merchant indifferent test (MIT) framework developed by Professors Jean-Charles Rochet and Jean Tirole needed to be applied taking account of the degree of pass through of interchange fees by issuers to card holders and of the extent of “always card” transactions.

In its 2018 judgment, the Court of Appeal relied heavily on that evidence in its judgment, making numerous references to Neil Dryden’s “framework” for balancing the costs and benefits of interchange fees. In particular, the Court held that this framework identified “a critical aspect of the balancing exercise required”.

The Supreme Court has now confirmed that approach and clearly stated that interchange fees complying with the MIT do not automatically qualify for exemption and that a balancing exercise needs to be performed taking account of the variables mentioned above. In so doing, the Court has confirmed the need for economic empirical evidence in the context of applying Article 101(3).

Neil Dryden was assisted on this matter over a period of around eight years by a team at Compass Lexecon including Stefano Trento, Laura Phaff, Robin Rander, Catalina Campillo, Gwilhem Charbonnier, Scott Holbrook, Vilen Lipatov, Orjan Sandewall, Segye Shin and Daniel Westrik.

Compass Lexecon worked closely with a team at Stewarts Law LLP led by Kate Pollock, including Inge Forster, Stuart Carson, Matthew Tighe, and Zachary Sananes.

Compass Lexecon also worked closely with the barrister team including Jon Turner QC, Meredith Pickford QC, Christopher Brown, Max Schaefer and Laura Elizabeth John.

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