Key Facts
- •NoteMachine UK Limited (NoteMachine), a major independent ATM operator, challenged three linked decisions by the Payment Systems Regulator (PSR) regarding NoteMachine's application for an investigation into ATM fee setting by LINK, the largest ATM network in the UK.
- •LINK sets interchange fees (IFs) paid by Issuers (banks) to Acquirers (ATM operators like NoteMachine). The fee-setting methodology changed in 2018, reducing IFs.
- •NoteMachine argued the changes were unlawful price fixing, favoring Issuers and harming Acquirers, leading to a decline in free ATMs.
- •NoteMachine's complaint to the PSR requested a fee increase and a change to the fee-setting methodology.
- •The PSR rejected NoteMachine's complaint, arguing it should be considered under Regulation 103 of the Payment Services Regulations 2017 (PSR2017) rather than Section 57 of the Financial Services (Banking Reform) Act 2013 (FSBRA), and subsequently decided not to investigate further.
Legal Principles
The PSR may not exercise powers under sections 54-58 of FSBRA to enable access to or participation in a payment system if Regulation 103 or 104 of PSR2017 applies.
Section 108 FSBRA
Rules or conditions governing access to payment systems must be objective, proportionate, non-discriminatory, and not inhibit access more than necessary to safeguard against risks or protect system stability.
Regulation 103 PSR2017
The PSR has a duty to consider whether proceeding under the Competition Act 1998 is more appropriate before exercising certain powers under FSBRA.
Section 62 FSBRA
In resource allocation decisions, judicial review intervention is limited to cases of irrationality.
CityHook v OFT [2009] EWHC 57
The principle of equality requires comparable situations to be treated similarly, and different situations differently, unless objectively justified.
R (on the application of Rotherham Metropolitan Borough Council and others) v Secretary of State for Business, Innovation and Skills [2015] UKSC 6
Outcomes
Judicial review application dismissed.
The PSR correctly applied Section 108 FSBRA, meaning it was required to proceed under Regulation 103 PSR2017. The PSR's decision not to investigate further under Regulation 103 or the Competition Act 1998 was not irrational.
Ground 1 (Misapplication of Statutory Provisions) failed.
The PSR's decision to proceed under Regulation 103 PSR2017 instead of Section 57 FSBRA was correct due to Section 108 FSBRA.
Ground 2 (Error of Law in the interpretation of ‘Discrimination’) failed.
The PSR correctly applied the concept of discrimination. Treating Issuers and Acquirers differently in fee setting is not inherently discriminatory.
Ground 4 (The ‘Primacy Duty’) failed.
The Primacy Duty under Section 62 FSBRA did not arise because the PSR's powers under Section 57 FSBRA were precluded by Section 108 FSBRA.
Ground 5 (Failure to Apply the Law on MIFs) failed.
The PSR did not err in its competition analysis; its decision not to investigate was based on resource constraints and the complexity of the issue, not a misunderstanding of the Competition Act 1998's applicability to low fees.