CAT Ruling On Pass-on In Merchant Interchange Fee Umbrella Proceedings

The Competition Appeal Tribunal has handed down a significant judgment relating to pass-on in the Umbrella Interchange Fees litigation, in which merchant claimants are suing in respect of an overcharge on the fees they incur when they accept card payments. In a decision that largely favoured the merchants, the Tribunal held that the legal test for causation in relation to pass on required a "direct causative link" between the overcharge and the prices merchants charged to their customers, which for the most part the factual and expert economic evidence had not established.

Pass-on is an important part of many competition litigation cases, given that the effects of an infringement of competition law may be felt at different levels of the supply chain and give rise to difficult questions as to where the loss lies. As it was in this case, pass-on can be relevant both as a defence to a claim for damages, where a claimant has mitigated its loss by passing it on, and also as the basis