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

Last Updated: 3 December 2014
Article by Tim Sales

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 will be time-barred from bring any action.

For the purposes of these proceedings, sections 2 and 9 of the Limitation Act 1980 (the Act) require proceedings to be commenced within six years of the action accruing. Ordinarily, therefore, the Retailers' claims would be time barred, to the extent that they relate to acts occurring six years before proceedings were issued (namely various dates in 2007, as not all claims were issued on the same dates in 2013).

However, section 32(1)(b) of the Act provides, in summary, that where any fact relevant to the Retailers' right of action has been deliberately concealed from them by Visa, the period of limitation does not begin to run until the Retailers discovered the concealments or could with reasonable diligence have discovered the fact.

In light of these provisions, the question faced by the High Court was whether there were any facts relevant to the Retailers' right of action that they did not know, or could not with reasonable diligence have discovered, prior to the limitation dates in 2007.

The decision

In coming to its decision the High Court held that:

  • there is an important public interest that claimants should not be prejudiced where they lack sufficient information to advance a claim;
  • there were a number of aspects of the MIFs that were concealed from the Retailers and have never been disclosed to them, including the actual MIF levels;
  • however, if a claimant is in possession of facts which are sufficient to enable a cause of action to be pleaded and which cannot be struck out for want of some essential averment, then the limitation period will not be suspended;
  • this was not a case of a secret cartel, the facts of which were only discovered many years afterwards. The existence and operation of MIFs were matters of public knowledge, which had been notified to competition authorities;
  • the trigger for the Retailers' issuing proceedings when they did was not the discovery of some new fact. It was the dismissal of an appeal by MasterCard against an infringement decision relating to MIFs in the EEA; and
  • the actual MIF levels were not relevant to the existence of the claim, provided the MIFs were more than zero, although they might be relevant to the Retailers' commercial decision as to whether to bring claims against Visa.


This decision stresses the importance of adhering to limitation periods, even where material has been concealed which would greatly assist in enabling a commercial judgment to be made as to whether proceedings should be issued. Provided sufficient information is available to plead a cause of action that would not be struck out, a claimant will not be able to make use of section 32 of the Act.

In this case, the impact on the Retailers of summarily dismissing around 30 years' worth of claims was great. The Retailers estimated that their claims would be reduced by an amount in the order of Ł500m.

A copy of the judgment can be found here – Arcadia Group Brands Limited and others v Visa Inc and others [2014] EWHC 3561 (Comm)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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