The CAT judgment last year in the Sainsbury’s Supermarkets v MasterCard case has generated much comment, particularly in its consideration of the pass-on defence put forward by MasterCard. The CAT decided that in order for the defence to be upheld, a causal connection needs to be made between the overcharge and identifiable increases in prices by the claimant firm to its customers. It held that in this case, such a connection was not demonstrated and the defence therefore failed. However, in spite of this lack of evidence, the CAT then went on to assume a 50% pass on of the overcharge when determining the interest to be calculated on the damages awarded. An appeal of this judgment is likely in due course.
In a recent article published in Competition Law Insight, we discuss the CAT’s treatment of pass-on in this judgment, from our viewpoint as forensic accountants. We point out some key considerations to be taken into account when deciding if pass-on has occurred in each instance, which would often depend on the unique circumstances of each case. In the real world, not all costs are necessarily passed on – there may be commercial considerations that prevent this from happening, and it also needs to be determined whether pass on has occurred as a result of a breach during the relevant time period.
We praise the common-sense aspect of the judgment which highlights the need for supporting evidence, though we express concern that this could potentially be undermined by the CAT’s odd decision on interest.
Please click on the link below to read the article in full.
[Reproduced with kind permission from Competition Law Insight.]
Bruno Augustin, partner
Aaron Bradley, associate