MasterCard Inc., already facing U.K. lawsuits after European Union regulators outlawed cross-border card fees, was sued by the owner of the Topshop clothing chain and five other British retailers.
The separate suits from electrical retailer Comet Group Ltd., HMV Music Ltd., B&Q Plc and Iceland Foods Group Ltd. were filed in a London court on Oct. 5.
Home Retail Group Plc (HOME)’s Argos and Homebase subsidiaries are claiming damages “arising from restrictive arrangements for multilateral interchange fees,” by MasterCard, the company said in an e-mailed statement.
The European Union’s antitrust agency said in 2007 that MasterCard’s fees for cross-border card payments violated antitrust rules, unfairly inflating the fees paid by retailers for processing payments. In May, the Purchase, New York-based company lost an effort to overturn the EU decision. It’s appealing the ruling to the EU’s highest court.
The charges are “essential to the operation of the MasterCard payments system,” Philipp Bruechert, a spokesman for MasterCard in Brussels, said in an e-mailed statement. They allow “card issuers, retailers and consumers to each pay for a fair share.”
EuroCommerce, a group representing European retailers, said in May that the fees cost stores about 25 billion euros ($32.4 billion) a year. The second-biggest card network, supported by banks such as HSBC Holdings Plc (HSBA) and Royal Bank of Scotland Group Plc, has said the so-called multilateral interchange fees were crucial for sharing the costs of debit and credit-card payments.
Spokespeople for HMV and Iceland declined to comment on the filings, while Topshop owner Arcadia Group Plc, B&Q and Comet didn’t immediately respond to requests for an interview.
After the EU court ruling in May, MasterCard was sued by five other U.K. retailers including Wal-Mart Stores Inc. (WMT)’s Asda and the U.K.’s fourth largest grocer, William Morrison Supermarkets Plc, claiming “anti-competitive conduct,” according to court documents.
The companies sought damages, dating from 1992 across the European Union and since 2000 in the U.K., for credit-card fees they said the European Commission had ruled “void and unenforceable.” Companies are entitled to claim damages once a regulator has ruled that a competitor or supplier has breached antitrust rules. All five of the May claims are for damages in excess of 300,000 pounds ($481,000).
The “unlawful inflation” of charges continues to cause loss and damage to Asda’s business, lawyers for the grocer said in court documents dated July 18.
Retailers have long complained about card costs. Unlike for checks, banks charge interchange fees to process debit and credit-card payments. Card operators set the amounts, own the payment networks and pass the money to the lenders. The retailer’s bank pays the fees to the customer’s card issuer.
Interchange fees “have always been compliant with EU and U.K. law,” MasterCard’s Bruechert said.
The case is: Arcadia Group Brands Ltd. v. MasterCard Inc. (MA), High Court of Justice, Queen’s Bench Division, 12-1305
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