Deutsche Bahn AG & Others v (1) MasterCard Incorporated

JurisdictionEngland & Wales
JudgeMr Justice Barling
Judgment Date09 March 2018
Neutral Citation[2018] EWHC 412 (Ch)
CourtChancery Division
Docket NumberCase No's: HC-2012-000196
Date09 March 2018

[2018] EWHC 412 (Ch)

IN THE HIGH COURT OF JUSTICE

BUSINESS & PROPERTIES COURTS

OF ENGLAND AND WALES

COMPETITION LIST (Ch Div)

Royal Courts of Justice

Strand, London, WC2A 2LL

Before:

THE HONOURABLE Mr Justice Barling

Case No's: HC-2012-000196

HC-2014-000636

Between:
Deutsche Bahn AG & Others
Claimants
and
(1) MasterCard Incorporated
(2) MasterCard International Incorporated
(3) MasterCard Europe SA (formerly Known a MasterCard Europe SPRL)
(4) MasterCard/Europay UK Limited
Defendants

Mr Kieron Beal QC & Mr Tristan Jones (instructed by Hausfeld & Co LLP) for the Claimants

Mr Mark Hoskins QC, Mr Matthew Cook & Mr Hugo Leith (instructed by Jones Day) for the Defendants

Hearing dates: 10 th May – 16 th May 2017

Approved Judgment

I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic.

THE HON. Mr Justice Barling

Mr Justice Barling

INDEX

HEADING

PAGE NO.

Introduction

7

The MasterCard Scheme

7

The claim periods

10

The claims

10

EEA MIF Claims

10

Domestic MIF Standalone Claims

11

CAR Claims

11

Limitation defence

11

The witness evidence

11

Applicable law for the period 11 January 2009 to date

12

Applicable law for the 1995 Act period: 1 May 1996 to 10 January 2009

13

The relevant provisions of the 1995 Act

13

The parties' basic contentions

14

The correct approach to section 11

15

Application of section 11 to the facts of this case

16

(i) The elements of the events constituting the alleged tort

16

(ii) The countries in which the elements and/or events took place

18

Location of the restriction on competition

19

Location of the loss

19

The location of the setting of the MIFs/the CAR

19

A pleading point

20

The decision-making structures relevant to the setting of MIFs and rules

21

Relevant decision-making: the dispute about the effect of the IPO

23

My conclusion on the IPO dispute

26

My conclusions on the location of setting the MIFs and the CAR

26

(iii) The relative significance of the elements/events of the tort

29

The Claimants' alternative case under section 12 of the 1995 Act

33

Correct approach to section 12

33

The Claimants' submissions and my conclusion on section 12

34

Applicable law by reference to common law: 22 May 1992 to 30 April 1996

36

The parties' contentions

37

The lex loci delicti

38

The effect of the 1984 Act

39

The exception to the double actionability rule

40

EU principles

41

(i) Brussels Recast Regulation

42

(ii) Principle of effectiveness

44

(iii) Principle of equivalence

45

Conclusion: disapplication of the double actionability rule and/or the 1984 Act

46

Applicable Law: Conclusions

46

Applicable law for the period 11 January 2009 to date

46

Applicable law for the 1995 Act period: 1 May 1996 to 10 January 2009

46

(a) Under the general rule in section 11(2)(c) of the 1995 Act

46

(b) The Claimants' alternative case under section 12 of the 1995 Act

46

The period governed by the common law: 22 May 1992 to 30 April 1996 (a) The lex loci delicti

46

(b) Disapplication of the double actionability rule and/or subsection 1(2)

46

Next steps

47

GLOSSARY OF TERMS

TERM

PARA WHERE DESCRIBED

DESCRIPTION

“MSC”

7

Merchant Service Charge

“MIF”

7

Multilateral Interchange Fee

“the Scheme”

7

The worldwide MasterCard payment scheme

“Europay”

7

Europay International S.A.

“the 2015 Order”

7

Order dated 11 November 2015 (as amended by an Order dated 26 April 2017) directing this trial of a preliminary issue

“the test country claims”

7

The claims in the present proceedings relating to four sample countries: Germany, Italy, Poland and the United Kingdom

“Issuing Banks”

7

A bank or other financial institution licensed under the Scheme to issue MasterCard credit, charge or debit cards to Cardholders

“Acquiring Banks”

7

A bank or other financial institution who is licensed under the Scheme and who enters into a contractual relationship with a Merchant enabling the latter to accept a MasterCard card at that Merchant's point of sale

“Cardholder”

7

A holder of a MasterCard credit, charge or debit card pursuant to a contractual arrangement with an Issuing Bank allowing for the use of it by the holder

“Merchant”

8

An establishment that accepts a MasterCard at the point of sale pursuant to a contractual relationship with an Acquiring Bank

“Scheme Rules”

8

Various rules and requirements laid down by the Defendants (whether mandatory or voluntary, or in some cases via default) in respect of the operation of the Scheme

“Interchange Fee”

8

The fee retained by the Issuing Bank before forwarding to the Acquiring Bank the balance of the sum referable to the Cardholder's transaction with the Merchant.

“EEA MIF”

9

A MIF which is applicable to cross-border transactions within the European Economic Area and to certain other transactions as specified in the Scheme Rules

“domestic MIFs”

9

These apply in certain circumstances to transactions within a particular country. They are set either by the Defendants or by the MasterCard licensees (banks and other financial institutions) in a particular country

“CAR”

10

Central Acquiring Rule

“Central Acquirer”

10

An Acquiring Bank established in country A which offers acquiring services to a Merchant in country B

Rome II

10

Regulation 864/2007/EC

the 1995 Act

10

The Private International Law (Miscellaneous Provisions) Act 1995

“the 2007 Decision”

10

Commission Decision C (2007) 6474 final of 19 December 2007 relating to a proceeding under Article 81 [EC] and Article 53 of the EEA Agreement

“the Defence”

11

Defendants' Re-Amended and Consolidated Defence

“P/C”

18

Amended and Consolidated Particulars of Claim

“IPO”

21

Initial Public Offering

“the Europay Board”

22

Board of Directors of the Third Defendant

“European Board”

22

The regional board of Europe comprised of member banks

“EIC”

22

European Interchange Committee

the 1984 Act

38

The Foreign Limitation Periods Act 1984

Mr Justice Barling

Introduction

1

The Claimants are some 1,300 retailers, comprising 7 corporate groups who operate in 18 European countries (17 EEA countries and Switzerland). They contend that, in breach of EU/EEA and domestic competition rules, the merchant service charges (“MSCs”) which they have paid to so-called “acquiring” banks in respect of MasterCard credit card and Maestro debit card transactions were higher than they should have been, in consequence of the multilateral interchange fee (“MIF”) paid by the Claimants' acquiring banks to card issuing banks in respect of each transaction, and that as a result they have suffered loss.

2

The Defendants are part of the MasterCard group of companies which owns and/or operates the worldwide MasterCard payment scheme (“the Scheme”). The First Defendant is a company incorporated in the State of Delaware. The Second Defendant is a company incorporated in the State of Delaware, and is a subsidiary of the First Defendant. The Third Defendant is a company incorporated in Belgium. It is a subsidiary of the First Defendant, and the legal successor to Europay International S.A. (“Europay”). The Third Defendant is based in Waterloo, Belgium, and has operated as the European head office for the Scheme. The Fourth Defendant is a company registered in England. The claim against this Defendant is only in respect of one of these consolidated claims (HC-13-CO5455) and UK domestic MIFs. The status of this claim is not clear in the light of the decision of the Court of Appeal in Arcadia Group Brands Limited and Ors v Visa Inc and Ors [2015] EWCA Civ 883.

3

This trial of a preliminary issue has taken place pursuant to paragraphs 1 and 3(a) of my order dated 11 November 2015, as amended by an order dated 26 April 2017 (“the 2015 Order”). Pursuant to the 2015 Order, the Court is to determine inter alia the applicable law in respect of those claims relating to four sample countries (Germany, Italy, Poland and the United Kingdom) (“the test country claims”).

The MasterCard Scheme

4

It is appropriate briefly to outline 1 the nature of the payment system with which the claims are concerned.

5

The Scheme is a world-wide payment scheme managed and represented by the Defendants. The Scheme operates as a network, whose licensees are banks or other financial institutions. Essentially, licensees are able to participate in the Scheme – assuming they are licensed by the Defendants – as issuing banks (“Issuing Banks”) and/or as acquiring banks (“Acquiring Banks”). Specifically:

(1) Issuing Banks are those banks that have a contractual relationship with the holder of a MasterCard credit, charge or debit card, allowing for the provision of the card to, and use of it by, the cardholder (“Cardholder”).

(2) Acquiring Banks are those banks that have a contractual relationship with a merchant (“Merchant”) that allows for the acceptance of a MasterCard card at that Merchant's point of sale. Card transactions can be accepted in a variety of ways. Generally speaking, the two most significant ways are by “chip PIN” and “on-line”. Chip PIN transactions occur where the Cardholder is physically present at the Merchant's point of sale, the transaction being validated by the entry by the...

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1 books & journal articles
  • Cross-border litigation: Evaluating the Brexit impact – a socio-legal model for data analysis
    • United Kingdom
    • Sage Maastricht Journal of European and Comparative Law No. 27-2, April 2020
    • 1 Abril 2020
    ...(2nd edition, Cambridge University Press, 2015).56. Ibid., p. 5.57. For example, Deutsche Bahn AG & Others v MasterCard Incorporated [2018] EWHC 412 (Ch). See also: M. Danov,‘Cross-Border Litigation: New Data, Initial Brexit Implications in England and Wales and Long-Term Policy Choices’,fo......

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