Deutsche Bahn AG & Others v (1) MasterCard Incorporated
| Jurisdiction | England & Wales |
| Judge | Mr Justice Barling |
| Judgment Date | 09 March 2018 |
| Neutral Citation | [2018] EWHC 412 (Ch) |
| Docket Number | Case No's: HC-2012-000196 |
| Court | Chancery Division |
| Date | 09 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
THE HONOURABLE Mr Justice Barling
Case No's: HC-2012-000196
HC-2014-000636
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
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 | |
| 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 | |
| 38 |
Introduction
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.
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.
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
It is appropriate briefly to outline 1 the nature of the payment system with which the claims are concerned.
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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