Credit Cards, Counterfactuals, and Antitrust Damages - The UK MasterCard Litigations

Abstract

The English courts in Sainsbury’s v. MasterCard and Morrisons v. MasterCard came to opposite conclusions on the illegality of MasterCard’s multilateral interchange fees (MIFs). While both courts posited bilateral counterfactuals, the Competition Appeal Tribunal (CAT) in Sainsbury’s held that this was a realistic counterfactual and that MasterCard had infringed Article 101(1); while the High Court in Morrisons found that the bilateral counterfactual was not realistic because MasterCard would not survive if faced with competition from Visa’s higher interchange fees. The courts also used very different methods to calculate the counterfactual interchange fee. There is now considerable legal uncertainty facing claimants and MasterCard. Here a critical assessment of the reasoning underpinning the two judgments is undertaken. The central thesis is that the counterfactual approach is flawed because of the constrained nature of and procedural constraints arising in litigation.