Sainsbury's Supermarkets Ltd v Mastercard Incorporated & Ors

This is an application by MasterCard providing for disclosure to the Claimant of documents that have been very recently supplied to MasterCard by the European Commission as a result of MasterCard's right to have access to the Commission's file, subject to certain safeguards. The documents were supplied in the context of an ongoing competition investigation being carried out by the Commission into what are called inter-regional interchange fees. That investigation has got to the stage where a statement of objections has been issued by the Commission in, I believe, July this year.

The application is made by MasterCard on its own initiative in the light of its continuing obligation in the present litigation to provide disclosure pursuant to the ordinary rules of procedure. The application is not opposed by the Claimant, Sainsbury's Supermarkets Limited, who is represented by Mr. Brealey QC and Mr Spitz, but the matter comes to me as an application because of the background to the documents in question and the way in which they have come into being.

That background is that the European Commission commissioned what has come to be known as the Deloitte Survey, which relates to the application of a method for calculating interchange fees that is known variously as “the merchant indifference test” or MIT, or “the tourist test”. I need not explain, even if I were able to, of what that methodology consists, but it is right to point out that that survey, and a pilot study which preceded it, were not carried out in the context of a competition investigation, but were commissioned and carried out because of the importance that the test has assumed. For that reason it was thought right that data should be collected with a view to testing, and indeed improving, the robustness of such a test particularly in the context of the “cost of cash” in retail transactions, that being an important aspect of the tourist test, which also involves a comparison between the cost of cash and alternative payment methods, in particular use of debit and credit cards.

It is accepted by MasterCard, represented by Mr. Cook, that the documents in question are clearly relevant to the issues in the present litigation. The simple reason is that the Claimant's case is that the only lawful way in which MasterCard could set the UK domestic interchange fees, which are the subject of this litigation, was in accordance with the tourist test. This is disputed by MasterCard and that dispute is the subject of expert evidence from both sides. That expert evidence takes into account and comments upon the Deloitte Survey. It is therefore clear that the documents supplied by the Commission to MasterCard are relevant to the analysis of the experts.

As far as disclosure of documents arising from a Commission investigation are concerned, there has already been a relatively recent communication from the Commission to the Commercial Court as to the factors which the court should take into account where disclosure is sought of documents arising from such an investigation. In his helpful skeleton argument Mr. Cook has drawn my attention to that letter from the Commission and to some of the key points which the Commission made in it, so far as relevant to the present application. In particular, the Commission emphasised that the court should provide appropriate protection for business secrets or other confidential information, and that as a result of the decision of the Court of Justice in Case C-536/11 Donau Chemie AG, there should not be either a generalised right of access to documents from a competition file or a principle which prevents access. Disclosure should be considered on a case by case basis, weighing up all the relevant factors. In particular, the court should weigh up the interests of the claimant, who is seeking damages, in obtaining access to relevant documents in support of that claim. When weighing that interest the court should have regard to inter alia other possible sources of the information in question that may be available to the claimant. On the other hand, the court needs to weigh and consider the harmful consequences that granting access may cause to the legitimate interests of other parties or to the public interest. The public interest in this context includes the effective enforcement of the competition rules by the public enforcement authorities, that is the Commission and, if appropriate, the national competition authorities. That, of course, was a factor emphasised by the Court of Justice in the well-known Pfleiderer decision, where the question was to what extent access and disclosure should be granted in respect of leniency statements.

In its letter to the Commercial Court the Commission also asked the court to refrain from ordering disclosure where such disclosure could undermine an ongoing investigation. Finally, the Commission reiterated the need for the protection of business secrets and other confidential information of third parties.

Of course, the documents with which we are concerned were not generated in the course of an ongoing investigation, as I have already explained. They were the subject of the Deloitte Survey and the pilot study. Nor are we concerned here with leniency documents.

For the sake of completion, I should perhaps point out that I am aware that in due course a different regime will apply to the disclosure of certain documents pursuant to the recent Damages Directive (Directive 2014/104 [2014] OJ L349/1). However, under the Directive’s transitional provisions Member States are not required to apply it to proceedings such as the present, which were already on foot at the material time.

MasterCard submits that although these documents were not generated for the purposes of a live Commission investigation, nevertheless they have been received by MasterCard in the context of the ongoing inter-regional interchange fee investigation and therefore the court should balance the desirability of disclosure to ensure a fair trial of the Claimant’s case against potential harm to the effectiveness of the Commission's ongoing investigation.

MasterCard also submits that they are relevant documents, that there is no other source for the material in question, and that in their view there is no reason why disclosure of these documents in the present proceedings would prejudice either MasterCard's position in the ongoing inter-regional interchange fee investigation, or the effectiveness of either the Commission's investigation of MasterCard or the Commission's investigations in competition matters generally.

To the extent that the documents contain confidential information, my attention has been drawn to a note from the Commission which accompanied the documents when they were supplied to MasterCard. It is headed "Note for the file" and appears to be undated. The Commission set out how the documents came into being. In particular they state that in December 2008 they had decided to carry out a study to measure the cost and benefits for merchants of accepting different payment means, and that this exercise was launched at a time when DG competition was analysing the possibility of relying on the merchant indifference test as a benchmark for assessing levels of interchange fees that could be exempt under Article 101(3) of the Treaty.

The note from the Commission also refers to the statement of objections, issued to MasterCard in July 2015 in the ongoing investigation, and to the fact that, as part of access to the file in that matter, documents relating to the study are being made accessible to the parties subject to those proceedings.

The note indicates that, in relation to both the pilot study to which I referred and the Deloitte Survey which followed, data was collected from merchants as to the value of sales, costs of labour, costs of goods and so on, and that the merchants' participation took place on condition that the information which they provided would be treated confidentially, would not be revealed to third parties, and would only be used for the purpose of testing the methodology for collecting data on the costs of payments. The Commission supplied to the merchants in question clarification of the protection of confidential data that would be put in place by the Commission. The Commission acknowledged that there was also a need to protect the identity of the participating merchants, and the note states that, in accordance with its rules for access to the file, the Commission has protected that anonymity where the disclosure would put them at risk of what it calls “retaliatory measures”. The note indicates, too, that the balance of the interests at stake here calls for the protection of both anonymity and business secrets of the merchants participating in the pilot survey as well as in the full Deloitte Survey.

Counsel have both submitted that the implication of this note is that the materials supplied to MasterCard, pursuant to its right to access to the file, reflect what the Commission consider to be compliance with the obligations they have undertaken to protect the business secrets and the identity of the retailers who agreed to participate in the surveys in question. That is no doubt the reason why MasterCard has submitted that, subject to appropriate safeguards, they consider there would be no prejudice to third parties or to the merchants if the material in question was disclosed.

I have also been informed that in the Commercial Court, in relation to similar proceedings brought by various claimants (including Sainsburys) against Visa, Hamblen J has accepted that documentary material which includes this same material is relevant and should be disclosed. Of course, these are documents which have been supplied to MasterCard because of the ongoing investigation. However, in the proceedings before Hamblen J, Visa was not in possession of them. So what appears to have happened is that Hamblen J wrote to the European Commission asking the Commission to disclose the material. I understand that no reply has yet been received.

Therefore, the question for me is whether in the light of the balancing exercise that the parties agree should be undertaken, the balance falls in favour of disclosure or non-disclosure. It being accepted that this is material which is relevant to an important issue in the proceedings before me, that represents a strong factor in favour of disclosure. Further, it is not material which is available from any other source. That is another of the factors which, as I have said, needs to be taken into account, and it constitutes a powerful factor in favour of the documents being made available in these proceedings.

As to the other side of the balance, prejudice to the merchants in question appears to have been catered for already in that, as the Commission’s Note records, the Commission has anonymised the material in such a way that the suppliers of the data cannot be identified. The Commission has also apparently taken steps to protect any business secrets and confidential material which relate to any of the participating merchants. Therefore, subject to what I shall say in a moment about additional safeguards, it seems to me that the interests of the merchants are already protected. Of course, I have not seen the documents, which are listed to a great extent in Schedule A of Mr. Cook's draft order.

As far as the other factor is concerned, namely the protection of the effectiveness of the Commission's ongoing investigation and Commission competition investigations generally, again, provided that the Commission have honoured their obligations of confidentiality to the suppliers of data when giving MasterCard access to the file (as no doubt they have), then there should be no reason why the disclosure of the material in question in the present proceedings, should adversely affect either the ongoing investigation or indeed future investigations, and in particular the willingness of commercial bodies to assist the Commission in this way.

My view is that the balance here is in favour of disclosure, but only if the following additional safeguards are put in place. The nuts and bolts of this can be discussed with counsel in due course, but, first of all, the Commission should have an opportunity to comment on the order that I propose to make. I am afraid it cannot be a lengthy opportunity in terms of time, given that we are now in October 2016 and the trial of these proceedings begins in January 2016. But one can assume that, in the light of Hamblen J's letter to the Commission, they have already embarked on the process of giving consideration to the matters on which they may wish to comment, and therefore it would not be a “standing start” for the Commission. Therefore I consider that I should make the entry into force of the order subject to a delay of, say, two or three weeks. I will discuss with counsel the actual length. The aim would be to give the Commission as long as possible to comment, so that if there is some vital point that they wish to draw to my, and the parties', attention, then they have an opportunity to do so.

The other factor, by way of an additional safeguard for the documents to be disclosed, relates to the manner in which disclosure of the material should take place. I suggest that, first of all, the external legal team of MasterCard should look at the material, which fortunately seems to be within a relatively small compass. I have not counted the number of documents, but it looks as though it consists of something in the order of 25-30 items. Those should be looked at in the first instance, to see if there is anything which MasterCard’s legal representatives consider would call into question the protection of the confidential interests of the merchants. Provision for this needs to be built into the order. In other words, there should be a first check by MasterCard’s external lawyers.

Then, when the documents are disclosed, they should, in the first instance, be disclosed only to such people within the existing confidentiality ring as it is necessary to show them. This will certainly include external counsel and solicitors, and perhaps also external experts, who are likely to be the people mainly concerned with them. I am not going to draft the order in the course of this ruling. The parties should provide a draft for my approval, which should give effect to those additional safeguards which I have identified. If there needs to be wider disclosure, for example, to any of Sainsbury's own personnel, then a further application to the court can be made in due course.