A settlement has been reached in the landmark UK collective action against Mastercard over the alleged overcharging of credit card fees that was at one point valued at £17bn.

The deal, which is subject to the approval of the Competition Appeal Tribunal (CAT), looks set to end nearly nine years of litigation, although the litigation funder backing the claim, Innsworth Advisors, said today that it strongly opposed the agreement and would be challenging it before the tribunal.

In a statement class representative Walter Merricks, who was advised by a Willkie Farr & Gallagher team led by partners Boris Bronfentrinker and Nicola Chesaites, said he was “very pleased” to agree a settlement “that I believe will deliver meaningful compensation to class members who choose to come forward to participate in the distribution of the damages”.

He added: “Ever since I began my claim I have aimed to ensure that the new regime for collective redress can be seen to work effectively and to do that I had to take my case to the Supreme Court. I now look forward to presenting the details of the settlement to the Tribunal for its consideration and approval.”

Citing a person familiar with the agreement, Reuters reported yesterday that the settlement was “around 200 million pounds”.  In a statement rebutting Innsworth's opposition to the settlement, Bronfentrinker said it represented a "very good outcome for UK consumers" who were set to receive "in the region of £40 to £50 each" if they participated.

Mastercard is being advised by a team from Freshfields led by Mark Sansom.

Pioneering claim

The claim was filed in 2016 by Merricks, the former financial services ombudsman, on behalf of 46 million citizens 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 originally 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.

In February, Willkie’s Bronfentrinker told the Law Society Gazette the claim, which at that point was valued at £10bn, was still “in play” after the CAT handed down a judgment on the extent to which the cross-border interchange fees had impacted UK interchange fees.

A Freshfields spokesperson had described the judgment as “very significant’ meaning that “over 90% of Mr Merricks’ case fails factually”.

The settlement will be put before the CAT for approval during a hearing expected by early next year depending on the availability of court time.

Challenge

A spokesperson for Innsworth, however, said the funder had already written to the CAT to inform it that it intended to challenge the agreement. 

Describing the reported value of the proposed agreement as "both too low and premature", the spokesperson said: "Both Walters Merricks and Boris Bronfintrinker have repeatedly claimed this is a multi-billion pound case, yet they seemed to have rushed to settle for a reported £200 million raising some serious questions." 

Bronfentrinker countered: "Any suggestion that after nearly nine years of litigation and all the hearings and judgments that have occurred, there has been any rush to settle is frankly absurd. To the contrary, based on the actual evidence that has now come to light and that was not previously publicly available, the realistic value of the claim has now become much clearer."

A Mastercard spokesperson said: “We are pleased to have reached an agreement in principle to put this case behind us. As the tribunal reviews the settlement, we will focus our energy on continuing to provide consumers and businesses with what they expect from Mastercard – a great payments experience, strong value and peace of mind.”

The Global Legal Post reported in June that a settlement had been reached in relation to a class action brought against Mastercard by more than 1,900 businesses as part of the interchange fee litigation. 

Mastercard as represented by Jones Day with the merchant claimants represented by Stephenson Harwood.