OFT ordered to pay credit card costs in ‘unusual’ CAT decision

In A highly unusual move, the Competition Appeal Tribunal (CAT) has ordered the Office of Fair Trading (OFT) to pay costs to intervener Visa Europe in the high-profile credit card fee arrangements probe.

The OFT has also been ordered to pay costs to the appellants Mastercard UK Members Forum (MMF), Mastercard International and Royal Bank of Scotland (RBS) after the CAT upheld their appeal on interchange fee arrangements.

One source close to the case said: “It’s very unusal for an intevener to have its costs paid.”

The total claimed by the appellants and Visa was just less than £5m, which represents more than 40 per cent of the OFT’s enforcement budget. However, the tribunal awarded costs from the date the OFT filed its defence (31 March 2006). This represents the entire amount claimed by Visa.

The CAT set a September 2005 OFT decision aside after the regulator had made the unprecedented move of withdrawing its decision anyway. In its judgment, the tribunal slammed the OFT for its handling of the investigation.

The CAT judgment read: “In this present case, it is regrettable that, after some six years of proceedings, these appeals have to be terminated without result. In fact the OFT filed a defence on 28 February 2006, which in material part resiled from the case made in the decision – which is unfortunate.

“The change made in the defence affected some 250 paragraphs of the 750-paragraph decision, which is a considerable proportion by any reckoning.”

Visa was advised by Freshfields Bruckhaus Deringer partner Deirdre Trapp and Stephen Morris QC of 20 Essex Street. MMF, Mastercard Internationl and RBS were represented by Lovells, Jones Day and Ashurst respectively.

Trapp said: “We’re pleased to have the force of Visa’s arguments recognised in the CAT’s order setting aside the OFT’s decision and in the award of costs.”

The OFT declined to comment on the decision.