DSG Retail Ltd & Ors v Mastercard Incorporated & Ors

This is a strike out/summary judgment application issued on 17th March 2015 by the defendants, represented by Mr. Matthew Cook. The application is opposed by the claimants, represented by Mr. Meredith Pickford QC and Ms. Julianne Kerr Morrison.

The claimants are various retailing companies consisting of a parent and some 13 subsidiaries, whom I shall call collectively "Dixons" or "the claimants". The defendants or "MasterCard" are companies in the MasterCard Group of companies, save for the fourth defendant, which is not part of that Group.

Originally three issues were raised: first, a strike out of part of the claimants' claims on grounds of limitation; second, a strike out of the claim against the fourth defendant (which has been in liquidation since 2011); third, a strike out/summary judgment in respect of the claim against the fifth defendant. The first two issues have now been resolved.

As to the first, Dixons originally sought to rely upon an argument which would have extended their claim back many years. However, in the light of the judgment of the Court of Appeal in Arcadiaand Others v Visa [2015] EWCA Civ 883, Dixons have agreed to withdraw the argument that the ordinary domestic limitation period or periods do not apply to its claims and have served draft amended particulars of claim on 14th October 2015 reducing the extent of their claims to a period of six years back from the date proceedings began, namely, six years from 25th June 2008, save in so far as MasterCard contends that different national laws apply, in which case Dixons rely on the relevant period under those laws. In practice, all the alternative laws pleaded by MasterCard have the same or a shorter limitation period than English law, with the exception of Swedish law. Therefore, it is now common ground that, save in relation to the claims in respect of Sweden, the claims cannot extend back beyond 25th June 2008, although MasterCard does contend that certain claims are subject to shorter limitation periods.

As to the second of the original issues, the claimants have settled their claim against the fourth defendant.

Therefore, the remaining and only effective application is MasterCard's application for summary judgment/strike out in respect of those claims against the fifth defendant based on the Multilateral Interchange Fee ("MIF") applicable to intra-EEA transactions, the International MIF and the "Honour All Cards" rule ("HACR") in the period after 11th January 2009.

The relevance of the latter date is that it is when the Rome II Regulation came into effect. The defendants contend that the claimants have included the fifth defendant in the claims in question in order to give the claimants the right to elect that those claims against all the defendants are governed by English law and, consequently, by the six year limitation period under English law, pursuant to Article 6(3)(b) of the Rome II Regulation. Article 6(3)(b) allows a claimant who sues defendants from several jurisdictions to elect that their entire claim is governed by the law of the forum provided that one of the defendants is based in that jurisdiction. The defendants contend that since the fifth defendant is based in England, it has been joined as a defendant without any basis being advanced for contending that it was involved in the matters about which complaint is made, and that if the claim was brought against just the first to third defendants (who are all incorporated outside this jurisdiction) the claims would be subject to other laws, with shorter limitation periods.

For this reason, the defendants' strike out/summary judgment application is focused on, and limited to, the period from 11th January 2009 when the Rome II Regulation came into force, and those claims in relation to which the claimants are only able to contend that English law applies if they can rely on the right of election under Article 6(3)(b) of that Regulation. As a result, while the claimants also make claims against the fifth defendant in relation to the period prior to 11th January 2009, and in relation to UKdomestic MIFs, the defendants do not seek to strike those claims out since the claimed right to elect for English law does not arise in relation to them.

With that prelude, I should now take a moment or two to explain the background to the claimants' claim. As already mentioned, there are three kinds of MIFs relevant for present purposes: (1) the UK MIF: the fee which applies when a UK-issued MasterCard is used at a UK-based merchant; (2) the EEA MIF: the fee applicable when a MasterCard issued in one EEA state is used at a merchant in another EEA state (or, when the card is used domestically, if no more specific MIF applies); and (3) the International MIF: the fee applicable when a MasterCard issued in one geographical region, such as North America, is used at a merchant in another geographical region.

As I have said, with the exception of the fourth defendant the defendants are companies within the MasterCard group of companies. The first and second defendants are, respectively, the ultimate group parent and the main operating subsidiary. The fifth defendant, a company incorporated in England and Wales, is directly or indirectly a subsidiary of the first and second defendants.

From about the time of its incorporation the fifth defendant has been a shareholder in the third defendant, which is a Belgian company and the main European operating subsidiary. At first, the shareholding was about 15%. However, on 14th November 2014 (shortly after these proceedings began) that shareholding was increased to virtually 100% by the purchase of some €10 billion worth of shares. I shall need to return in due course to the role of the fifth defendant within the MasterCard group.

The MasterCard scheme provides debit and credit card payment products. MasterCard does not itself deal directly with merchants and consumers but licenses thousands of banks and financial institutions worldwide to do so. Licensees can choose to specialise in transacting with merchants (referred to as "acquiring"), transacting with consumers (referred to as "issuing") or can do both. Most licensees choose to act solely as acquirers or issuers.

Thus, in a typical transaction under the MasterCard scheme, first a customer presents his MasterCard to a merchant by way of payment for goods or services; second, the merchant then seeks a payment from his acquiring bank; third, the acquiring bank seeks payment from the customer’s issuing bank; and finally the issuing bank seeks payment from the card holder.

As part of this arrangement, acquiring banks pay fees called "interchange fees" to the issuing banks. Each acquirer/issuer pair is free to agree the amount of these fees bilaterally. However, to cover the many cases where they do not do so, MasterCard sets, or makes provision for the setting of, default interchange fees which apply in the absence of a bilateral agreement. These multilateral default interchange fees are the MIFs to which I have referred.

The MIF which is applicable depends on the country in which the card was issued and where it is used at the merchant’s. Merchants pay merchant service charges ("MSCs") to their acquiring banks in return for the services provided to them. The MSC includes the MIF paid by the acquiring bank to the issuing bank.

By a decision dated 19th December 2007, the European Commission found that the first, second and third defendants had breached what was then Article 81 of the EC Treaty, now Article 101 of the TFEU, by setting and implementing the intra-EEA MIFs for the period between 1992 and December 2007. The basis of this decision was that the first, second and third defendants were part of an association of undertakings, which included the MasterCard scheme’s member banks, and the setting of the MIF was a decision of an association of undertakings for the purposes of the Article. The Commission found that the EEA MIF restricted competition between acquiring banks by setting a minimum floor in relation to the MSCs which acquiring banks charged to merchants. They also found that the first, second and third defendants had failed to put forward sufficient evidence to show that the EEA MIFs in place in the period between 1992 and December 2007 met the criteria for exemption under Article 101(3). The fifth defendant was not an addressee of the Commission decision, which made no finding that the fifth defendant had had any involvement in the setting of the EEA MIF.

The Commission's decision was upheld on appeal by the General Court and, on a further appeal, by the Court of Justice of the European Union. Following the decision, in June 2008 MasterCard reduced the EEA MIF to zero on a temporary basis while discussions were taking place with the Commission. In July 2009 MasterCard then increased the EEA MIF from zero to a positive charge but at a lower level than those which had been considered by the Commission in its decision.

The present proceedings were issued on 25th June 2014. In them Dixons advance four claims: first, in respect of the EEA MIF, in reliance on the decision of the Commission for the period prior to the 19th December 2007, and by analogy with that decision for the period thereafter; second, in respect of the UK MIF, relying on an analogy with the Commission decision; third, similarly in relation to the International MIF; and fourth, a claim in respect of the HACR.

In addition to the Commission's analysis, which is based on a decision by an association of undertakings, Dixons also contends that, in each of the four respects, there was an anti-competitive agreement between undertakings, namely, between MasterCard and its member banks, contrary to Article 101 TFEU and/or that there was an abuse of a dominant position contrary to Article 102.

With respect to each of the alleged infringements, the claimants contend that each of the first, second, third and fifth defendants was involved in the infringement from 22nd May 1992 up to the present time and continuing.

The parties are in agreement that, subject to this application, the law and in particular the limitation periods applicable to Dixons' claim, are to be determined by reference to two distinct periods: first, the period from 11th January 2009 to date, in respect which of the applicable law will be determined by reference to Article 6(3)(b) of the Rome II Regulation; and second, the period prior to that date, in relation to which the applicable law will be determined by reference to the provisions which pre-date the Rome II Regulation.

Article 6(3)(b) provides:

"When the market is, or is likely to be, affected in more than one country, the person seeking compensation for damage who sues in the court of the domicile of the defendant, may instead choose to base his or her claim on the law of the court seised, provided that the market in that Member State is amongst those directly and substantially affected by the restriction of competition out of which the non-contractual obligation on which the claim is based arises; where the claimant sues, in accordance with the applicable rules on jurisdiction, more than one defendant in that court, he or she can only choose to base his or her claim on the law of that court if the restriction of competition on which the claim against each of these defendants relies directly and substantially affects also the market in the Member State of that court."

In their draft amended particulars of claim (“APOC”) (which has been treated as the correct pleading, because I am told that the amendments are not likely to be disputed by the defendants) the claimants state that they elect under Article 6(3)(b) to have their whole claim governed by English law from 11th January 2009 to date. That is on the basis that the fifth defendant is domiciled in England, and the English market was "directly and substantially" affected by the restrictions of competition alleged (see paragraph 204 of APOC).

This application for a strike out is somewhat surgical. As clarified in the first witness statement of Nicholas Paul Cotter (the defendants' solicitor) dated 17th March 2015, the defendants' application is now to strike out or seek summary judgment in respect of the claims against the fifth defendant based on the EEA MIF, the International MIF and the HACR, in so far as those claims extend beyond 11th January 2009. This is because the defendants accept that English law applies to the claimants' claims in respect of the UK MIF, whether before or after 11th January 2009.

Thus, the following claims against the fifth defendant are not the subject of this strike out application: first, all claims with regard to the UK MIF for the period before or after 11th January 2009; second, claims in respect of the EEA MIF, the International MIF and the HACR for the period from 26th June 2008 to 10th January 2009 (whether the English limitation period applies is a separate matter); third, claims in respect of transactions taking place in the United Kingdom after the 11th January 2009, even where (apparently) the EEA MIF, the International MIF and/or the HACR applies to such transactions. This last point appears to be conceded in paragraph 222 of the defence.

I now turn to the applicable principles. The court’s approach to applications under CPR 3.4 and 24, respectively, to strike out statements of case or award summary judgment, are helpfully summarised in the very recent judgment of Simon J (as he then was) in ArcadiaGroup Limitedand Othersv Visa Inc [2014] EWHC 3561 (Comm). At paragraph 19, the learned judge said this:

"The relevant principles on applications under CPR Rule 3.4 (2) to strike out statements of case, and under Rule 24(2)(a)(i) for summary judgment are not controversial. On an application to strike out the question is whether the whole or the material part of a statement of case discloses reasonable grounds for bringing the claim. In relation to a summary judgment, the principles have been summarised in a passage of the judgment of Lewison J in Easyair Ltd v. Opal Telecom Ltd [2009] EWHC 339 (Ch) at [15], which has often been cited and approved, see for example Etherton LJ in A C Ward & Son v. Catlin (Five) Limited [2009] EWCA Civ [24]. For present purposes it is sufficient to identify eight points which are of potential relevance to the present applications.

(1)

The court must consider whether the claimants have a 'realistic' as opposed to a 'fanciful' prospect of success, see Swain v. Hillman [2001] 1 ALL ER 91, 92.

(2)

A 'realistic' prospect of success is one that carries some degree of conviction and not one that is merely arguable, see ED & F Man Liquid Products v. Patel [2003] EWCA Civ 472 at [8].

(3)

The court must avoid conducting a 'mini-trial', without the benefit of disclosure and oral evidence: Swain v. Hillman (above) at 95.

(4)

The court should avoid being drawn into an attempt to resolve conflicts of fact which are normally resolved by a trial process, see Doncaster Pharmaceuticals Group Ltd v. Bolton Pharmaceutical Co 100 Ltd [2006] EWCA Civ 661, Mummery LJ at [17].

(5)

In reaching its conclusion, the court must take into account not only the evidence actually placed before it on the application for summary judgment, but the evidence that can reasonably be expected to be available at trial: Royal Brompton Hospital NHS Trust v. Hammond (No. 5) [2001] EWCA Civ 550 at [19].

(6)

Some disputes on the law or the construction of a document are suitable for summary determination, since (if it is bad in law) the sooner it is determined the better, see the Easyair case. On the other hand the court should heed the warning of Lord Collins in AK Investment CJSC v. Kyrgyz Mobil Tel Ltd [2001] UKPC 7, [2012] 1 WLR 1804 at [84] that it may not be appropriate to decide difficult questions of law on an interlocutory application where the facts may determine how those legal issues will present themselves for determination and/or the legal issues are in an area that requires detailed argument and mature consideration, see also at [116].

(7)

The overall burden of proof remains on the defendant, … to establish, if it can, the negative proposition that the [claimant has] no real prospect of success (in the sense mentioned above) and that there is no other reason for a trial,
see Apvodedo NV v. Collins [2008] EWHC 775 (Ch), Henderson J at [32].

(8)

So far as Part 24.2(b) is concerned, there will be a compelling reason for trial where 'there are circumstances that ought to be investigated', see: Miles v. Bull [1969] 1 QB 258 at 266A.In that case Megarry J was satisfied that there were grounds for scrutinising what appeared on its face to be a legitimate transaction; see also Global Marine Drillships Limited v. Landmark Solicitors LLP [2011] EWHC 2685 (Ch), Henderson J at [55]-[56]."

In TFL Management Services Ltd v Lloyds Bank [2013] EWCA Civ 1415 and [2014] 1 WLR 2006, Floyd LJ stated that, after applying the ordinary principles to a strike out or summary judgment application:

"The court should still consider very carefully before accepting an invitation to deal with single issues in cases where there will need to be a full trial on liability, involving evidence and cross-examination in any event, or where summary disposal of the single issue may well delay, because of appeals, the ultimate trial of the action ... removing road blocks to compromise is, of course, one consideration but no more than that. Moreover, it does not follow from Lewison J's seventh principle that difficult points of law, particularly those in developing areas, should be grappled with on summary applications ... such questions are better decided against actual rather than assumed facts."

As I have said, the defendants contend that the fifth defendant has been joined without any basis for alleging that it was involved in the matters the subject of the proceedings, simply in order to enable the claimants to elect English law, and therefore English limitation periods, in respect of the period after the 11th January 2009.

Mr. Cook submits that in those circumstances, the claims should be struck out in the respects I have identified, as disclosing no reasonable grounds for bringing them and/or as being in those respects an abuse of the court's process for the purposes of CPR 3.4(2)(a) and (b). In relation to 3.4(2)(b), he submits that it is an abuse of process to bring and maintain a case if there is no proper basis for doing so.

Both parties, therefore, agree that the issue before the court now is whether the defendants can establish that the claimants have no realistic (or real), as opposed to fanciful, prospect of showing that the fifth defendant is liable for any infringement relating to the application of the EEA MIF, the International MIF and the HACR for the period after 11th January 2009.

As I have said, APOC alleges that each of the defendants was involved in each of the alleged infringements of Article 101 and 102 from 22nd May 1992 to date and continuing. In that regard, see paragraph 151 of APOC as to the EEA MIF, paragraph 171 as to the UK MIF, paragraph 179 as to the International MIF, paragraph 184 as to the HACR, and paragraph 199 as to the abuse of a dominant position.

In their defence, the defendants dispute that the claimants have any basis for these claims against the fifth defendant. The defendants' position on the role of the fifth defendant is developed in the first and second witness statements of Mr. Cotter. In brief summary, he states: that the fifth defendant had no involvement in setting or implementing the EEA MIF, the International MIF or the HACR in the period after 11th January 2009 (see paragraph 40 of his first witness statement); that (and this is not a matter of dispute) the Commission's decision was addressed to the first to third defendants and did not make any finding that the fifth defendant had any involvement in relation to the EEA MIF; that no factual basis is advanced in APOC for contending that the fifth defendant had any involvement in relation to the EEA MIF, the International MIF or the HACR; and that prior to November 2002 the fifth defendant was owned by various banks which were members of the MasterCard scheme, and since that time, the fifth defendant has been wholly-owned subsidiary of the MasterCard group.

Mr Cotter also states that while it was owned by the MasterCard member banks, until June 2002, the fifth defendant was the entity which set the UK MIF for MasterCard credit cards, but that then the fifth defendant's business was transferred to the fourth defendant, since when the fifth defendant has had no involvement in setting the UK MIF or the UK domestic rules, and that between 2003 and 2008 the company was dormant; and he has exhibited the accounts of the company which so indicate.

According to Mr. Cotter’s evidence, the fifth defendant ceased to be dormant from 2009 but from that time it has only been a holding company with no employees. In his second witness statement he indicates that the fifth defendant held 15% of the shares in the third defendant for most of the period from the former’s incorporation until the commencement of these proceedings, and that the remaining shares in the third defendant were held by the first and/or second defendants, or by their wholly-owned subsidiaries. In that witness statement he also states that the fifth defendant had what is described as a limited role in a small number of transactions, none of which involved any participation in the matters which are the subject of these claims.

In relation to the 15% shareholding by the fifth defendant in the third defendant, as I stated at the beginning of this judgment, in fact the third defendant became the 100% subsidiary of the fifth defendant in November 2014. That was not made clear in Mr. Cotter's witness statements, although it could have been ascertained from a document exhibited to his second statement. As it happens, the claimants dug out the details of that development from other documents which are in the public domain.

As to the transactions in which the fifth defendant has participated, to which Mr. Cotter referred in his second witness statement, one of these was the purchase in October 2010 by the fifth defendant of Data Cash Group Limited. Evidence produced by the claimants at this hearing indicates that Data Cash Group Limited operates MasterCard's payment gateway services. In a press release at the time of the 2010 purchase, MasterCard is quoted as believing that:

"the acquisition of Data Cash will create a long-term growth platform providing the company with the ability to drive the growth of the e-commerce category in concert with MasterCard's acquiring customers, thus increasing the use of MasterCard branded credit and pre-paid products as well as MasterCard and Maestro branded debit products for online purchases, particularly in Europe and other markets."

Given that “acquiring” is the very business through which the Commission found the anti-competitive effects of the EEA MIF were manifested in the level of the MSC, the claimants, unsurprisingly, submit that the purchase by the fifth defendant of Data Cash Group Limited, a major European payment service provider, is not irrelevant to the implementation of the MIFs, particularly given that the fifth defendant is now the owner of virtually the whole of the European main operating subsidiary of MasterCard, namely the third defendant.

However, in the light of Mr. Cotter's evidence in particular, the defendants submit that whatever the position prior to 2002, there is no basis for contending that the fifth defendant participated in the alleged wrongdoing by inter alia implementing decisions taken by other group companies in relation to the period after the 11th January 2009. The defendants also contend that there is no realistic prospect of the claimants succeeding in a case based on the fifth defendant being liable for the alleged infringements in the period in question on the ground that the fifth defendant forms part of the same "undertaking" (as that concept is understood in EU law) with the first to third defendants and/or on the ground that the fifth defendant was part of the association of undertakings which is alleged to have infringed EU law since 11th January 2009.

These concepts of "undertaking" and "association of undertakings" require some explanation.

As to an “undertaking”, it is common ground that the EU competition rules, and their UK parallels in the Competition Act 1998, apply to "undertakings". Under EU competition law, it is settled that an "undertaking" means an entity engaged in an economic activity regardless of the legal status of that entity or the way in which it is financed. Thus, "undertaking" denotes an economic unit, even if, in law, that economic unit consists of several persons, natural or legal. For the purposes of the rules on competition, the formal separation between two parties resulting from their separate legal personality is not conclusive, the test being the unity of their position on the market. Hence the term in common use "single economic unit", denoting an “undertaking” in this sense.

As a result, in certain circumstances one company may be liable for an infringement committed by another. The issue has generally arisen where a company does not enjoy independence in deciding upon its action on the market, and is under the influence of another company. If the latter has "decisive influence" over the former, then the latter may be treated as liable for an infringement of competition law committed by the former. The situation usually arises in the context of parent and subsidiary.

Thus "decisive influence" is the test for a "single economic unit", which forms an “undertaking” for these purposes. There is a rebuttable presumption that a wholly-owned subsidiary is subject to the decisive influence of its parent. Where a parent and subsidiary form part of a single undertaking in this way, the parent may be jointly and severally liable for an infringement of competition law committed by the subsidiary.

However, decisive influence is not restricted to parents of wholly-owned subsidiaries. Whether or not it exists in a particular case is a question of fact to be determined in the light of all relevant evidence. Relevant factors include, for example, the extent of any shareholding as between the companies, the composition of the management of the companies, and the extent to which in practice one company does influence the activities of the other (see, for example, the passages and case law cited at paragraph 2.025 to 2.028 of Bellamy and Child, EU Law of Competition, 7th edition by Vivien Rose and David Bailey).

It is also worth noting that the Court of Justice has made clear that

As far as the infringement by means of "decisions by association of undertakings" is concerned, the General Court in Case T-111/8 MasterCard Inc v European Commission [2012] 5 CMLR 5, said, at paragraphs 242 to 243:

"242.

It should also be borne in mind that the definitions of 'agreement', 'decisions by associations of undertakings' and 'concerted practice' are intended, from a subjective point of view, to catch forms of collusion having the same nature which are distinguishable from each other only by their intensity and the forms in which they manifest themselves……..

243.

With regard specifically to the definition of 'decisions by associations of undertakings', as Advocate General Leger pointed out in his opinion in Wouters v Algemene [etc] [2002] ECR 1-1577 ... this seeks to prevent undertakings from being able to evade the rules on competition on account simply of the form in which they coordinate their conduct on the market. To ensure that this principle is effective, Article 81(1) EC covers not only direct methods of coordinating conduct between undertakings (agreements and concerted practices) but also institutionalised forms of cooperation, that is to say, situations in which economic operators act through a collective structure or a common body."

In the present case, the claimants allege that the first to third and fifth defendants are part, or representatives, of an association of undertakings which through its decisions has infringed inter alia Article 101 of the Treaty, and continues to do so up to the present time, and therefore necessarily in the period after 11th January 2009. In their pleading the defendants have put in issue the alleged infringement, but their pleaded stance is somewhat nuanced so far as the EEA MIF is concerned. Paragraph 16 of the defence reads as follows:

"The MCI defendants do not admit that they remained representatives of an association of undertakings after 19th December 2007, however, if they did by June 2009, the MCI defendants had withdrawn all the specific authorities previously granted to the European Board (at the same time re-named “European Advisory Board”). Since the power of the European Board to determine all issues other than interchange was a key feature upon which the Commission relied in concluding that MasterCard remained an association of undertakings after the IPO until December 2007, it follows that MasterCard ceased to be an association of undertakings after June 2009. Alternatively, MasterCard ceased to be an association of undertakings in June 2010 when Class M directors were abolished. In the premises, Article 101 ceased to apply to decisions taken by the MCI defendants in relation to interchange after 19th December 2007 or alternatively June 2009 or June 2010."

Similar patterns of pleading are used in respect of the International MIF and the HACR. Thus, whilst denying that the fifth defendant had any role in setting the EEA MIF, the International MIF and the HACR, the defendants accept (see paragraphs 16 and 170 of the defence) that the first to third and fifth defendants are part of a single “undertaking”. They also impliedly admit, so far as the UK MIF is concerned, that they were representatives of an association of undertakings until the IPO in May 2006, with alternative positions in respect of June 2009, June 2010 and April 2014 (see paragraph 21 of the defence).

In relation to the EEA MIF, there is of course the finding in the Commission decision that the first three defendants were part of an association of undertakings up to December 2007. There is the also the "non-admission" that these defendants were representatives of an association of undertakings after 19th December 2007, and the contention that they ceased to be such after June 2009, alternatively June 2010.

The significance of all this is, first, that the claimants allege that the fifth defendant has been a member of an association of undertakings at all material times and continuing, and second, that this is either admitted or found by the Commission in respect of part of that period, and is merely “not admitted” for a period of about six months after 11th January 2009. So it is not denied for that period. Moreover, as well as contemplating (by merely “not admitting” rather than denying) that the association of undertakings of which the fifth defendant formed part remained in existence until June 2009, or even June 2010, so that Article 101 applied to decisions of that association until then, the defence also accepts that the fifth defendant was acting in concert with the first to third defendants on specific occasions, and as recently as 2014. (See in that regard paragraph 92, and also paragraph 108(vii), of the defence.)

The defence also accepts that, in so far as there has been any infringement of the competition rules by reason of the EEA MIF, the first to third defendants are liable for such infringement. That is combined with the specific denial that the fifth defendant had any involvement in "setting" the EEA MIF (see paragraph 161 of the defence). That contention is put in slightly different terms in paragraph 221 of the defence, which states that the EU Commission in its 2007 decision made no finding that the fifth defendant had any "involvement" in relation to the EEA MIF, and asserts that the fifth defendant did not at any time have "such involvement". It appears from later passages in the same paragraph that by "involvement" is probably meant involvement in setting the EEA MIF. The pleading also implies that if one does not set the MIF, then there is no liability for it.

I have already referred to paragraph 170 of the defence, in which it is averred that the first to third and the fifth defendants form a single "undertaking".

I should also mention paragraph 88. This refers to the first to third and the fifth defendants revoking the power of the European Board to set the EEA MIF, and their delegation of this role to their own management from the time of the public offering in May 2006. That assertion appears to contemplate that these defendants have common management, which is perhaps understandable if they are a single economic unit, as it is accepted they are.

The suggestion of common management also chimes with the material exhibited to the witness statement of Ms. Bernadine Adkins, the claimants' solicitor. This material, derived from MasterCard's website, indicates that of nine persons described as "our people" and "executive committee", four are or have been directors also of the fifth defendant.

In the light of these factors, I do not consider that it would be right to strike out, or grant summary judgment in respect of, the aspects of the claimants' claim which are the subject of this application. I will state my reasons as briefly as possible.

First, it is alleged that during the relevant period, that is after 11th January 2009, the fifth defendant was a part of, or a representative of, an association of undertakings responsible for taking decisions which infringed and continue to infringe inter alia Article 101 in relation to the EEA MIF. As I have said, that contention (in so far as it alleges that the fifth defendant was part, or a representative, of an association of undertakings which took relevant decisions) is not denied by the defendants in respect of a period of at least six months in 2009. Why should that allegation not be allowed to go to trial? If it proves to be correct, as presently advised, I can see no reason why it should not at least very arguably involve joint and several liability on the part of the fifth defendant (with other representatives/members/parts of the association of undertakings) for any relevant infringing decision of the association. No authority has been shown to me which indicates that an allegation in those terms is so deficient as to be strikeable.

Further, the basis for the allegation is reinforced by other factors to which I have referred. Amongst these is the suggestion, which may be established or not at trial, of a common management as between the fifth defendant and other parts or representatives of the association of undertakings in question. The EU Commission decision does not state that only the first to third defendants, who were the addressees of the decision, were responsible for the EEA MIF. There were clearly other members of the association of undertakings (see, for example, paragraph 63 of the decision).

Furthermore, it is clear from the Commission decision that, once an association of undertakings has been identified, when considering the lawfulness of the association’s decisions the Commission is not so interested in precisely who did what and when. It is, therefore, at the very least, well arguable that provided the fifth defendant is a member of the association, it would not avail the fifth defendant to show in what specific aspects of the decision-making it was/was not involved at any particular time, and that as long as it continued to be part of the association, it was jointly and severally liable for the decisions of the association, even though the defendant may have been "dormant" or without employees for some of the time.

As Dixons point out, the MasterCard scheme is a single worldwide payment organisation which was found by the Commission to have a decentralised governance structure, both before and after the 2006 IPO. The EEA MIF and the international MIFs can apply to transactions completed by merchant retailers such as the claimants in any country, including the UK, and the HACR applies on a global basis. Even a domestic MIF, such as the UK MIF, may apply to transactions with cross-border elements and be governed by rules set by a national forum. All the MIFs and the HACR are applied in accordance with the network rules. Dixons' case is that all representatives and members of the association forming part of the decentralised structure implement and are responsible for the operation and enforcement of different parts of the network rules. Dixons allege that, accordingly, any representative of the MasterCard scheme, whether the representative acts at the global regional or national level, is and remains a representative of the scheme. They say that that is true even if the representative’s focus is on representing a particular group of members, or on applying local rules under the authority of the network scheme, or on representing the association in a particular jurisdiction.

In those circumstances, there is no justifiable basis for contending that the fifth defendant cannot arguably be liable for an infringing decision of the association.

That is probably sufficient to deal with MasterCard's application. However, there are further factors which militate against a strike-out here. I have mentioned already that the defendants themselves assert that the fifth defendant was and remains part of a single undertaking comprising also the first to third defendants. It follows that this has been the case since 11th January 2009 (the relevant date for present purposes) and continuing. It is common ground that the Commission found that the first to third defendants were responsible for infringing the competition rules by virtue of the EEA MIF up to December 2007. The claimants allege that that (or a similar) infringement continued and continues to date. In the context of this application, they submit that they do not need to go further and, in particular, that they do not need to establish that the fifth defendant itself set or implemented a specific MIF. It is sufficient, they submit, that at the material time the fifth defendant was part of the infringing undertaking.

Mr. Cook, for the defendants, submits that that is wrong. In this regard, he relies heavily upon what I shall call the Provimi line of cases in the English courts, and also upon the Court of Justice’s decision in Aristrain, to which I have referred. In ProvimiLtd v Roche Products [2003] EWHC 961 (Comm) Aikens J (as he then was) held at paragraph 31 of his judgment that it was

In Cooper Tire v DOW Deutschland [2010] EWCA Civ 864, the Court of Appeal were of the view that the point was also arguable in the opposite direction. Longmore LJ stated at paragraph 45 of his judgment:

"It is by no means obvious, even in an Article 101 context, that a subsidiary should be liable for what a parent does, let alone for what another subsidiary does. Nor does the Provimi point sit comfortably with the apparent practice of the Commission, when it exercises its power to fine, to single out those who are primarily responsible or their parent entities rather than to impose a fine on all the entities of the relevant undertaking. If, moreover, liability can extend to any subsidiary which is part of an undertaking, would such liability accrue to a subsidiary which did not deal in rubber at all?"

The Court of Appeal indicated that had they been obliged to determine the point, a reference to the European Court may well have been necessary.

The Aristrain case, to which Mr. Cook referred, decided a rather different point, namely, that simply because companies form part of the same group does not make them a "single economic unit", i.e., a single "undertaking”, so as to be liable to pay fines for each other.

In KME Yorkshire v Toshiba Carrier [2012] EWCA Civ 1190, the Court of Appeal considered obiter the Provimi point, and referred to the Court of Justice's decision in Aristrain as having decided it against the point that Aikens J considered arguable. However, as we have seen, Aristrain was dealing with the criteria for determining whether two or more companies formed a single economic unit or “undertaking”, whereas Aikens J and Longmore LJ in Cooper Tire were considering the circumstances in which one company could be liable for the infringing conduct of another company in circumstances where both were part of a single “undertaking”.

These two questions are different, and it appears to me, with great respect, that the issues raised by Aikens J in Provimi and by Longmore LJ in Cooper Tire, remain open questions. Indeed, in KME Yorkshire, Etherton LJ (as he then was) seemed to confirm that when he said:

"It is clear that, save in a case where the parent company exercises 'a decisive influence' (in the language of EU jurisprudence) over its subsidiary or the same is true of a non-parent member of the group over another member, there is no scope for imputation of knowledge, intent or unlawful conduct."

In the present case, there is no doubt but that the first to third and fifth defendants are part of the same economic unit and therefore the same “undertaking”. This is accepted by the defendants, probably because the fifth defendant is the wholly-owned subsidiary of one or both of the first and second defendants. However, there is also the relationship between the third defendant and the fifth defendant to be considered. We have seen that the fifth defendant has been a significant minority shareholder in the third defendant throughout the relevant period, including the period when the third defendant was found by the Commission to be responsible for infringing the competition rules by reason of the EEA MIF. Now it has emerged that since 2014 the third defendant has been wholly-owned by the fifth defendant.

As I have already said, the question of "decisive influence" is a question of fact in each case. Since 2014 (ie in a period after 11th January 2009) there has been a rebuttable presumption that the fifth defendant has decisive influence over the third defendant. Prior to 2014, no such presumption is in place, but that does not mean that such influence could not exist. It is a matter of evidence, which would include the fact that, as we have seen, there appears to have been common management.

In this regard, I do not believe that the decision of the Court of Justice in Case C-172/12 P and C-179/12 P Du Pont v Commission, a judgment of 26 September 2013, relied upon by Mr. Cook, takes the matter any further. The dictum at paragraph 47 of that decision simply confirms that "decisive influence" is a question of fact.

I was also referred to case C-440/11 P Commission v Stichting, a judgment of 11th July 2013. In that case the Court of Justice held that, where the issue was whether an undertaking is to be penalised for infringement of the competition rules, it is irrelevant whether each individual legal entity comprising the undertaking is itself economically active and therefore individually constitutes an undertaking. The only decisive factor for the purposes of the penalty is that all the legal entities held jointly and severally liable for the penalty together constitute, with the entity whose direct involvement in the infringement has been established, "a single undertaking". It is the actual exercise by the holding entity of decisive influence over the author of the infringement which is important. Therefore, it is not necessary for a holding company itself to be an "undertaking" if it exercised decisive influence over the infringer, and together they formed an undertaking within the meaning of EU law (see in particular paragraphs 42 to 45 of that judgment).

The upshot is that in the context of a strike out or summary judgment application, it is simply not appropriate to try and decide whether the fifth defendant, admittedly part of a single “undertaking” throughout the material time along with the first, second and third defendants, is ipso facto liable jointly and severally for any infringement of the competition rules committed by that single undertaking up to the present time and continuing. It is, in my view, perfectly well arguable that it would be so liable.

Indeed, as pointed out by Mr. Pickford, MasterCard has itself argued in another case that to say it was not liable was unarguable. That was in the context of another strike out application brought by MasterCard on grounds of ex turpi causa, namely, Tesco Stores Ltd and Others v MasterCard [2015] EWHC 1145, (Ch) a decision of Asplin J.

There, leading counsel for MasterCard is recorded as arguing inter alia that each company within a single economic entity falls to be regarded as jointly and severally liable for an infringement "because the companies within the entity are treated as one and the same and ... that liability for the infringement does not depend on having to establish the personal involvement of each company in the infringement" (see paragraph 20 of the judgment).

Mr. Cook submits that Tesco was different because there the party who MasterCard was suggesting was clearly jointly and severally liable was Tesco Bank Limited which, he says, was obviously an active participant in the MasterCard scheme. That may be a valid distinction; but, even if it is, it does not serve to render the claimants' case here so lacking in substance that it should be struck out. The same applies to the defendants' observation that in the decided cases it is usually the parent whose liability for what the subsidiary has done is in issue, whereas here the fifth defendant is (at least so far as the first and second defendants are concerned) a subsidiary.

As far as one can see, none of the cases expressly determines the situation with which we are dealing. To submit that it is unarguable that a subsidiary in the fifth defendant's position would be jointly and severally liable with its parents (and with its own subsidiary as from 2014), with whom it admittedly forms a single undertaking and may well have common management, would, in my view, itself be an untenable proposition. In this regard one must also bear in mind that the fifth defendant is a company which at one time admittedly played an active role in setting and implementing a domestic MIF, which has throughout been a significant minority shareholder (until it became a 100% parent) of a company which has itself been found to have infringed the competition rules by virtue of its involvement in the EEA MIF up to at least the end of 2007, and which is part of the association of undertakings to which I have referred.

Furthermore, as we see from Ms. Adkins' witness statement, there is a basis for regarding the fifth defendant as still involved in the overall MasterCard payment scheme in regard to its purchase of Data Cash in 2010, as well as its ownership of the third defendant from 2014. This does not appear to be a case such as that discussed by Teare J in Cooper Tire at first instance [2009] EWHC 2609 (Comm), where a subsidiary is involved in a wholly different line of business from that of its parent. Indeed, if that were the case, the two companies might well not form part of the same economic unit, which is not disputed here.

The question whether the fifth defendant is jointly and severally liable with the first to third defendants in respect of the period after 11th January 2009 cannot sensibly be isolated and determined without consideration of the overall factual matrix. For these reasons, I would not strike out any part of the claims against the fifth defendant. I cannot properly find that the claimants' pleading discloses no reasonable ground for the claims in question, nor that they represent an abuse of process. That is so regardless of the claimants' motivation for joining the fifth defendant. Nor can I properly award summary judgment against the claimants on those parts of the claims. They involve mixed questions of fact and law. In so far as they involve issues of law, this is a case where it would not be right to decide them in advance of the trial, as in my view they can only properly be determined in the context of full and relevant findings of fact. It is to be noted that we have not yet even had disclosure in this case.

Mr. Pickford relies upon other aspects of the claimants' claims as entitling the claimants to go to trial on the issues in question. Some of those aspects I have already touched upon as being relevant to the “decision of an association of undertakings” point and/or the “single economic unit” or “undertaking” point, in that they were said to form part of their factual context. Indeed, in my view, these issues are, as I have said, intermingled.

Yet further aspects relied upon by the claimants, as indicating personal involvement in the infringement on the part of the fifth defendant, include the following

First, the allegation by the claimants that all participants in the MasterCard scheme, including the fifth defendant, must have known that the relevant elements were unlawful as it is an infringement by object (see paragraph 222 of APOC). Mr. Cook submits that, other than in relation to their claim for exemplary damages, the claimants do not plead that the fifth defendant was aware of the unlawfulness of the EEA MIF and is liable as a result. He says that they are right not to do so, as that would not be sufficient to render the fifth defendant liable in any event.

Next, there is the fact that the Commission found that the EEA MIF and, by analogy, the International MIF, act as a floor for the level of domestic MIFs and bilateral agreements. The claimants contend that this shows that, to the extent that the fifth defendant was involved in setting or implementing the UK MIF, it was indirectly involved in implementing the EEA or International MIF, including in the period after 11th January 2009. The defendants deny that the fifth defendant had any involvement in setting the UK MIF after 11th January 2009 (see paragraph 221(d) of the defence).

Even leaving these points out of account, it is clear, not least in the light of the material referred to in Ms. Adkins' evidence, that there are factual issues to be explored in relation to the fifth defendant's role in this period, as regards both the UK MIF and the MasterCard scheme more generally. Such issues cannot properly be explored, let alone decided, in the context of a strike-out application. To do so would involve the kind of mini-trial which is outlawed in almost all cases.

Similarly, in so far as questions of law arise, for example in relation to the circumstances in which one company is liable for the infringement of other companies who form part of the same “undertaking” in EU law, such questions are, to borrow Floyd LJ's comment, "better decided against actual rather than assumed facts".

I should also mention the claimants' submission that this application fails to take account of their allegation that all entities within the MasterCard organisation, or all of them plus the licensee banks, are dominant, or collectively dominant, and have abused and continue to abuse that dominance in breach of Article 102. The claimants point to the fact that, in their defence to that allegation, the defendants do not single out the fifth defendant in any respect, but simply deny dominance and abuse. They submit that if dominance and abuse are established, then liability would apply to all the defendants, including the fifth defendant.

The claimants pray in aid Cases 6-7/73, Commercial Solvents [1974] CMLR 309. There the Court of Justice found that two companies formed a single economic unit and that, as such, each was jointly and severally liable for abuse of a dominant position, notwithstanding that the dominant company within the single undertaking carried out no activity at all in the relevant European market where the conduct complained of was engaged in by the other company (see paragraphs 46 to 41). The claimants submit that this shows that when one is considering an allegation of this kind, it is necessary to do so in the light of a full assessment of the facts and, in particular, of the links between the different companies within the single undertaking.

Mr. Cook's response to the submission that the fifth defendant was not singled out in the defence is once more to point to the defendants' contention in the pleading and/or in Mr. Cotter's evidence that the fifth defendant was not involved in any of the factual matters about which complaint is made in relation to the period after 11th January 2009.

It seems to me that there is no real distinction for present purposes between the issues in relation to the claimants' Article 101 case and those in relation to its Article 102 case. I do not therefore believe that the abuse point adds or subtracts anything for the purposes of the present application.

For the reasons I have endeavoured to explain, I find that the defendants have not discharged the burden of establishing that the claimants have no realistic prospect of showing that the fifth defendant is liable for the alleged infringement of the EU competition rules relating to the application of the EEA MIF, the International MIF and the HACR in the period after 11th January 2009. There is, therefore, no ground on which I could find abuse of process by reason of the joinder of the fifth defendant in that respect. For the same reasons, those parts of the claimants' claims challenged in this application are not struck out, nor are the defendants entitled to summary judgment.

At the end of the argument, a point was made by Mr. Cook that I should determine this application on the assumption that it will decide definitively the efficacy of the election which the claimants have made under Article 6 of the Rome II Regulation. He submitted that, by the same token, I should not approach the application on the basis that it does not matter if these questions go to trial as the election can be reopened at a later stage if the relevant claims prove to be unfounded.

I have duly noted that submission, but I am not really sure how it impacts on the matters I have to decide, which arise under CPR, rules 3.4 and 24. In any event, the conclusions I have reached in this case are clear and not ones I regard as borderline.