The Competition Appeal Tribunal (CAT) has formally approved a £200m settlement in the landmark collective action brought by Walter Merricks against Mastercard, concluding nearly a decade of litigation over interchange fees.
The 80-page ruling, handed down this morning by Mr Justice Roth, confirms the tribunal’s earlier indication that the settlement was “just and reasonable”, despite being significantly lower than the original £16bn claim.
It comes against the background of a bitter falling-out between Merricks and the funder, Innsworth Capital, which opposed the deal and launched arbitration proceedings against him after the terms were agreed.
“Not only have I had to fight Mastercard, but I also had to fight Innsworth Capital,” Merricks said. “Despite this, I am proud to have achieved the largest consumer settlement through the English courts.”
The settlement is structured into three financial ‘pots’. The first allocates £100m for direct payments to class members. A second tranche of £45.6m is set aside to cover Innsworth’s costs.
The funder is also set to receive a return of 1.5 times its investment – approximately £22.8m – paid from the third pot of £54.4m. The remainder of this pot may be used to supplement class member payments if take-up exceeds 5%, or otherwise donated to the Access to Justice Foundation, which intervened in the case.
The tribunal has appointed retired costs judge Andrew Gordon Saker as an independent expert to assess legal costs, underscoring the complexity and scale of the proceedings.
The ruling emphasised that the legal and evidential landscape had shifted significantly since proceedings began in 2016, and that the likelihood of judgment being obtained for sums significantly larger than £200m was low.
The tribunal also found the personal indemnity to Merricks, albeit in unusual circumstances, did not impugn the tribunal’s view of the settlement.
In a statement defending the funder’s actions, Innsworth’s MD Ian Garrard pointed out that it would receive a return of less than 15% of the £150m surplus, despite taking all the risk.
“We do not think it is a reasonable division of the proceeds, or one that will do anything to encourage investors to fund other opt-out collective actions,” he said. “We are therefore considering all of our options, including asking the courts to look again at this matter.”
Merricks, however, criticised the funder’s “strong-arm tactics”, demanded an apology and called on the Association of Litigation Funders to investigate.
He said the action could have bankrupted him, but a £10m personal indemnity from Mastercard “allowed me to sleep at night at a critical moment”.
Mastercard welcomed the decision, with its legal team at Freshfields saying the ruling vindicated its view that the settlement was fair and proportionate.
Claims administrator Epiq will oversee the distribution, with eligible consumers having six months to claim. If the expected 5% of the class – around 2.2 million people – come forward, each will receive £45. The total class is estimated at more than 44 million people. The amount may rise to a cap of £70 if significantly fewer than 5% of the class submit claims.
If the take-up is 10% (around 4.4 million people), which Epiq considers unlikely, each claimant would receive £22.50.
The judgment made it clear the Access to Justice Foundation was the only charity prescribed under legislation to receive unclaimed damages in the event of a judgment.
CEO Clare Carter welcomed the ruling, noting that its work helping “the disadvantaged pursue or protect their legal rights seems to us an appropriate recipient of residue funds in these proceedings”.
She added: “We have already begun working with partners to ensure any unclaimed money gets distributed to charities that will improve access to justice for those that need it the most.”
Boris Bronfentrinker of Willkie Farr & Gallagher represented Merricks, instructing lead counsel, Marie Demetriou KC, with Mark Hoskins KC and Nicholas Bacon KC assisting, with juniors.
Mark Sansom of Freshfields represented Mastercard, instructing lead counsel, Sonia Tolaney KC, with Matthew Cook KC assisting, with juniors.
Akin Gump represented Innsworth Capital, instructing Charles Béar KC and Bibek Mukherjee in the tribunal proceedings.
Gerard Rothschild of Brick Court Chambers appeared pro bono for the Access to Justice Foundation, the statutory recipient of unclaimed damages. The foundation was granted permission to intervene and provided submissions on how unclaimed funds should be handled.
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