A Costly Delay? The Price Paid By Retailers In Their Claims Against Visa

Summary and implications

In 2013 claims were issued by a number of well-known retailers (the Retailers) against Visa Inc (and four other Visa entities) (Visa) alleging that Visa were guilty of restricting completion by imposing a minimum transaction fee when payments were made using a Visa card. The claims covered payments and charges from 1977.

In summarily dismissing those parts of the claims that related to alleged infringements of competition law that took place more than six years before the claims were issued, last month the High Court considered the interplay of the provisions of the Limitation Act 1980 within private competition damages claims.

The background

When a purchase is made by a customer using a Visa card, the Retailer's bank (known as the Acquirer) pays the Retailer the amount to be paid by the customer, less a Merchant Service Charge. The customer's bank (known as the Issuer) collects payment from the customer and pays the Acquirer the amount paid by the customer, less a transaction fee (known as the Interchange Fee).

The Merchant Service Charge paid by the Retailer is made up of:

a fee for the Acquirer's services; a card fee payable to Visa; and the Interchange Fee. For the purposes of the Retailers' claims, the general level of the Interchange Fee is set by Visa, such fee being made up of the Visa multilateral interchange fees (MIFs). In some circumstances the MIFs make up approximately 80 per cent of the Merchant Service Charge paid by the Retailers.

The claims

The Retailers allege that the MIFs, by effectively setting a minimum price that the Retailers had to pay their banks to process Visa card payments, restricted completion, and had such illegality not been employed, a lower level of MIFs (or none) would have applied. Visa's conduct inflated the Merchant Service Charge payable and the Retailers are therefore seeking damages based on this alleged overcharge for a period going back to 1977.

Rules on limitation

There are a number of public interest reasons for imposing restrictions on when claims can be brought. These include:

ensuring certainty and finality in litigation; avoiding difficulties for the court in adjudicating claims where, because of the passage of time, evidence may be unavailable or less reliable; protecting defendants from having claims hanging over them indefinitely; and encouraging claimants to act promptly to enforce their rights. Once the appropriate time limit has expired, generally a claimant...