On 27 March 2015, the UK Competition and Markets Authority (“CMA”) published a summary of a decision rejecting a request for interim measures in the context of the CMA’s Visa interchange fees investigation (see here). Worldpay, a provider of provider of payment services to merchants, sought a direction pursuant to section 35 of the Competition Act 1998 (the “Act”) to require Visa to align its UK domestic multilateral interchange fees with those that apply to cross-border transactions from 1 January 2015, in accordance with binding commitments given to the European Commission.
The CMA has the power to issue a direction pursuant to section 35 of the Act (an interim measures direction) if:
(a) the CMA has begun, but not completed, an investigation under section 25 of the Act; and
(b) the CMA considers that it is necessary for it to act (under section 35 of the Act) as a matter of urgency for the purpose of:
(i) preventing significant damage to a particular person or category of person; or
(ii) protecting the public interest.
Worldpay offers payment services to merchants and in this capacity processes payment card transactions, levying a merchant service charge each time a cardholder uses a payment card to purchase goods or services. Worldpay in turn pays fees to both the payment scheme operator (such as Visa or MasterCard) and the bank or other financial institution that issued the payment card to the cardholder. The latter fee is known as a multilateral interchange fee (“MIF”).
On 22 September 2014, Worldpay submitted an application to the CMA requesting that the CMA exercise its power under section 35 of the Act to issue an interim measures direction to Visa UK Limited (“Visa”).
In its application for interim measures, Worldpay submitted that it would suffer economic and reputational damage that would jeopardise its financial position due to the fact that from 1 January 2015 the MIFs applicable to cross-border acquired transactions (cross-border acquired MIFs) would be at levels below the MIFs applicable to equivalent UK domestic transactions (domestic MIFs).
According to Worldpay, this difference meant that merchants would be incentivised to switch to offshore competitors as these providers would be able to process UK merchants’ Visa transactions as cross-border transactions which would be subject to lower MIFS. Worldpay submitted that the damage caused to it would occur as a result of Visa’s domestic UK MIFs remaining at anticompetitive levels.
Having fully considered the evidence it had gathered, the CMA concluded that it was more likely than not that Worldpay, through its own newly incorporated offshore subsidiary, would be able to process cross-border acquired transactions for UK merchants in early January 2015, if not sooner, and that Worldpay would therefore suffer little or no damage from the non-alignment of MIFs for domestic and cross-border acquired Visa transactions. As such, the CMA did not consider that it was necessary for it to act as a matter of urgency to prevent significant damage to Worldpay.