The UK Supreme Court recently handed down its judgment on appeals relating to competition damages claims brought by Sainsbury’s and other retailers against Mastercard and Visa. Amongst other issues, the appeals considered the legal framework for pass-on, whereby it is alleged that claimants transferred any overcharge to their own prices to customers. In these cases, the pass-on argument was deployed as a defence, although it can also be used against defendants in claims involving indirect purchases. As recognised by the Competition Appeal Tribunal (CAT) in its original Sainsbury’s/Mastercard judgment, no cases under English law had previously dealt substantively with the pass-on defence. The Supreme Court’s judgment therefore provides potentially important insights into how the issue of pass-on should be considered in competition damages claims. This article considers the potential implications of the judgment for the economic analysis of pass-on, with a focus on its use as a defence (although similar considerations may apply where it is used by indirect purchasers).
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