London, February 18, 2026 — The UK Competition Appeal Tribunal (CAT) has rejected key elements of Mastercard and Visa’s “pass-on” defence in the Merchant Interchange Fee Umbrella Proceedings, ruling that the defendants failed to prove that retailers passed on unlawful interchange fee overcharges to consumers through higher prices.
The judgment, issued following Trial 2 of the damages phase, addresses whether merchants mitigated their losses by incorporating multilateral interchange fees (MIFs) into retail pricing. The CAT had previously found in earlier proceedings that certain MIFs set under Mastercard and Visa’s four-party schemes infringed EU competition law. Trial 2 focused on whether the overcharges arising from those infringements were passed on.
Merchant Pass-On and Acquirer Pass-On
The Tribunal divided the proceedings into two components:
- Trial 2A (Merchant Pass-On, MPO): Whether retailers passed on the alleged overcharge to consumers through higher prices.
- Trial 2B (Acquirer Pass-On, APO): Whether acquiring banks passed MIFs on to merchants through higher merchant service charges (MSCs).
Tribunal Rejects Broad Economic Pass-On Theory
Mastercard and Visa argued that merchants passed on most or all of the MIF overcharge through higher retail prices, thereby avoiding loss. The Tribunal rejected that broad theory.
The CAT held that establishing pass-on requires proof of a direct causal link between the unlawful overcharge and downstream pricing decisions. It is not sufficient to show that the overcharge formed part of a retailer’s general cost base or that businesses aim to recover costs overall.
The Tribunal made clear that defendants must demonstrate that the specific overcharge influenced actual pricing decisions. General economic models or high-level assertions about cost recovery were insufficient.
Evidence Did Not Establish Systematic Pass-On
After reviewing extensive expert economic analysis and detailed factual evidence from a representative group of “Analysed Claimants” across sectors, including retail, telecoms, travel, and hospitality, the CAT found that Mastercard and Visa had not established systematic pass-on.
In many cases, merchant service charges (which incorporate interchange fees) were treated as overheads rather than direct inputs into pricing. For several retailers, the charges represented a very small proportion of total turnover, weakening the argument that they materially affected retail pricing.
While the Tribunal acknowledged that in some instances businesses may adjust prices to reflect cost increases, it concluded that the defendants had failed to demonstrate that the MIF overcharge specifically drove retail price increases across the claimant group.
Acquirer Pass-On Considered Separately
The judgment also addressed whether acquiring banks passed interchange fees on to merchants via higher merchant service charges. The Tribunal evaluated this issue separately, noting that the dispute had narrowed substantially, with the parties agreeing that Interchange Plus (IC+) and IC++ contracts involve 100% pass-on because their structure automatically passes MIFs through in full.
For standard/blended contracts, the Tribunal rejected Mastercard’s proposed counterfactual focus on only MIF decreases or zeroing MIFs. Instead, it assessed whether MIFs were in fact passed on and at what level, using both increases and decreases as potentially informative. While economic theory pointed to high pass-on, the CAT stressed APO was ultimately an empirical question and treated the studies as indicative only, given data limitations and methodological disputes.
On the size-based argument, the CAT found the evidence did not reliably support different APO rates for smaller versus larger merchants, and declined to set separate group rates.
The case is 1517/11/7/22 (UM) Umbrella Interchange Fee Claimants v Mastercard and Visa before the Competition Appeal Tribunal.
