On 18th August 2021, the Competition Appeal Tribunal (CAT) certified the Merricks v Mastercard lawsuit, the first ever Collective Proceedings Order (CPO) to be granted in the UK. Whilst it is common for cases of such magnitude as this to be brought in nations such as the United States of America, this is likely to be a landmark case for the United Kingdom.
Background of the case
Over a decade ago, on 19th December 2007, the European Commission ascertained that Mastercard was imposing unlawful fees on transactions processed through its systems. The Commission stated that consumers likely lost out due to this unlawful behaviour as the additional processing fees imposed on businesses led to higher retail prices. Whilst Mastercard tried to appeal this decision, it finally lost in 2014.
When originally brought in 2017, the case was rejected by the CAT as the claims were deemed ineligible for a CPO. However, in December 2020, the Supreme Court decided to remit the case to the CAT once more.
Why is this such a landmark?
Class actions working on the basis of an opt-out system have only been available since 2015. Under the Consumer Rights Act 2015, a collective claim may be brought on behalf of any number of individuals who have suffered a common loss. Individuals no longer have the burden of bringing their own separate claims, but instead may receive compensation through a collective claim led by a representative. Opt-out or US-style class actions like this tend to be much more complex than traditional named-party litigation and often come at a much higher expense.
It has taken six years for the first procedural step to be taken towards an opt-out class action damages award in the UK. It is likely to therefore be a landmark decision in the current legal climate and gives rise to the potential that the English courts may see a shift away from traditional litigation towards a more US-style system where class action becomes more commonplace.
Who are the 46 million class members?
Class members in this case come from a broad range of backgrounds. This is because the action is taken behalf of all individuals over 16 who purchased goods and/or services from UK businesses accepting Mastercard payments between 22nd May 1992 and 21st June 2008 and who were resident in the UK for at least three months (with a few other exceptions). It is important to note that according to the CPO, the form of payment used to purchase from the businesses above is irrelevant (i.e., the class member need not have paid with a Mastercard, or any form of debit or credit card). This is because the proposed claim asserts that all consumers who bought from businesses accepting Mastercard payments had to pay more for goods and services and so lost out due to Mastercard’s unlawful conduct.
Who is bringing the claim?
The CPO Application has requested that Walter Merricks CBE becomes the class representative for this case. Merricks is a qualified lawyer in England and Wales and is also the former Chief Ombudsman for the Financial Ombudsman. In this position, which he held for a decade, he ensured that relevant consumers secured billions of pounds in compensation from banks, building societies, and other financial institutions acting unlawfully. Whilst he is the requested representative, he will only lead the claim if the CAT decides that he is suitable for the position.
Merricks seeks to be the class representative but is not able to fund a claim of such a size and of such high public importance on his own. He is therefore working with third-party litigation funders Innsworth Capital Ltd to bring the claim. Including £15 million set aside to cover Mastercard’s costs in the event that the claim is unsuccessful, the total amount of funding behind the claim is set at £60.1 million. The funding arrangements in place mean that class members do not have to source any funds to partake in the case and have no financial risk regarding it.
How much money is at stake?
The proposed claim seeks approximately £14 billion of compensation from Mastercard. This is to cover the additional costs paid by consumers for goods and services due to Mastercard’s unlawful additional charges.
In a recent statement, Mastercard’s UK and Ireland Divisional President, Kelly Devine, has claimed that the claim amount has already dropped by 35%. This is due to the CAT deciding on the side of Mastercard on two major issues: whether the claim could be brought on behalf of deceased individuals and whether compound interest could be included. Freshfields Bruckhaus Deringer partner, Mark Sampson, said this is already a ‘win’ for Mastercard.
Conclusion
Overall, this is an exciting progression in the litigation and consumer welfare legal spheres, and marks a potential shift in the opinions of individuals and lawyers alike that this sort of litigation is ‘distasteful’. Rather, many more judges are becoming ‘more receptive’ to group litigation such as this.
Regardless of the outcome of this Tribunal, it is certain that this case will be a landmark of our times and stands as a ‘really positive step for consumers’ with the potential to open the door to future litigation of this type.
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