Mastercard’s proposed £200m settlement with Walter Merricks, the lead claimant in a class action representing approximately 46 million UK consumers, has been approved by the Competition Appeal Tribunal (CAT).

The CAT endorsed the settlement today, rejecting a challenge by the claim’s funder, Innsworth Capital, which argued that the value of the settlement was too low and did not meet the statutory test of being ‘just and reasonable’.

The settlement resolves the long-standing litigation over credit card fees, which was at one stage valued at £17bn.

Merricks said: “I am very pleased that after more than eight years, where I have given my all to get the best result possible for UK consumers, that the tribunal has today confirmed that the settlement I agreed with Mastercard is just and reasonable – in fact, the tribunal went as far as to say it had no doubt about that.

“I had clearly hoped to have recovered more, but the case and facts developed in a way that meant I could recover less than I initially planned, but I recovered the best amount possible.”

Agreement between the two sides was announced in December. However, Innsworth was quick to challenge it.

During the two-day hearing Mark Brealey KC of Monckton Chambers, representing Merricks, emphasised that the proposed settlement brought certainty and mitigated the risk of consumers receiving nothing if the litigation persisted, according to the Law Society Gazette.

Sonia Tolaney KC, joint head of One Essex Court, representing Mastercard, said the £200m offer was the maximum amount Mastercard was willing to pay.

However, Innsworth’s counsel Charles Béar KC of Fountain Court Chambers, said “the class does not get a fair return on this settlement on any view of distribution”, the Gazette reported.

According to a report by Law 360, the tribunal – which will deliver reasons for the decision at a later date – expressed “some concerns as to how the matter was dealt with” in the run-up to the agreement.

Commenting on today’s ruling, Merricks’ lead adviser, Willkie Farr & Gallagher partner Boris Bronfentrinker, said: “These proceedings started off as a landmark case in setting the foundation for collective actions in the UK and it will end being as equally groundbreaking in a settlement achieved under heavy attack and challenge by the litigation funder.”

The case – one of the most significant to come before the CAT – was originally filed in 2016 by Merricks, the former financial services ombudsman, making it the first collective action proceeding initiated after the 2015 Consumer Rights Act gave the green light to ‘opt out’ competition group claims.

The action was only finally approved by the CAT in May 2022 after it rejected the application in 2017 only for the Supreme Court to back it in December 2020 after a series of appeals.

The case stemmed from a European Commission decision – backed by the European Court of Justice in 2014 – that Mastercard had infringed competition law through its use of charges known as interchange fees on cross-border transactions. It was alleged that UK consumers using Mastercard had paid too much for goods between 1992 and 2008.

Mastercard was advised by Freshfields partner Mark Sansom while Akin Gump partner Richard Hornshaw advised Innsworth.