UK’s class action regime finally ready for take off after landmark Mastercard ruling
£15bn consumer claim proceeds to trial following CAT ruling – with amendments
After years of legal wrangling, lawyers are finally anticipating the ‘take off’ of the UK’s class action regime following a decision by the Competition Appeals Tribunal (CAT) to allow a £15bn consumer claim against Mastercard to proceed.
The CAT issued the first-ever collective proceedings order on Wednesday (18 August), thereby giving the claim the green light, albeit with significant revisions and subject to assurances being given by the claimant’s funders, Innsworth Capital.
“With the test for certification now established, the regime introduced in 2015 to permit an aggregate award of damages for harm to consumers and businesses can finally take off,” was the assessment of partner Nicola Boyle of Hausfeld, which has recently launched claims against Apple and Google.
The action, led by former Financial Services Ombudsman Walter Merricks, was the subject of a historic UK Supreme Court ruling last year, following the CAT’s refusal to grant certification in 2017.
The Supreme Court upheld the Court of Appeal’s decision to allow certification, remitting the case to the CAT for reconsideration. That application was not opposed by Mastercard, through its lawyers, Freshfields Bruckhaus Deringer, although the CAT struck out claims by deceased persons and claims for compound interest.
The class covers 46 million potential claimants, calculated on an opt-out basis. They are UK residents over 16 who used the cards from 1992-2008 and incurred interchange fees, which the European Commission has held to have infringed EU competition law.
The CAT noted Merricks anticipated having access to a £45m war-chest to cover costs and disbursements, with £15m set aside for adverse costs.
“We are satisfied that this should enable Mr Merricks to pursue the proceedings adequately for the class members,” the tribunal said, noting “the revised costs budget … sets out costs which total just under £32.5m”.
Innsworth, however, has the right to withdraw from the claim should potential damages not exceed £179m – subject to independent legal and forensic advice, which the CAT said “fairly addresses our concerns”.
Merricks was satisfied, saying the CAT had allowed him “to continue to fight for the legal right to compensation for those consumers, in the face of Mastercard’s anticompetitive conduct”.
He added that the ruling “heralds the start of an era of consumer-focused class actions which will help to hold big business to account”.
His lawyer, Quinn Emanuel partner Boris Bronfentrinker, said the CAT ruling was “an important landmark” for the CPO regime.
“Many doubted the suitability of this claim for a collective action, but the entire legal team representing Mr Merricks never stopped believing,” he added. “It is very satisfying to know that Mastercard must now defend on the merits a claim of £15bn in the knowledge that it has a binding finding of infringement against it.”
However, Mark Sansom, the lead partner at Freshfields, said the CPO ruling was “a win for Mastercard”, adding: “The judgment was not about whether or not the claim would be certified. Rather, it relates to whether the claim could include claims on behalf of deceased people and for compound interest.
“The Tribunal has found for Mastercard on both points, ruling that those claims cannot be included in this case and reducing the value of the claim by over 35%.”
He said his client would address “critical points relating… to limitation and causation, which affect nearly all of the remaining claim”.
Genevieve Quierin, a commercial disputes partner at Stephenson Harwood, said: “It remains to be seen whether such an ambitious claim can succeed, but the real value of this decision is that it demonstrates the statutory mechanisms work and will provide other consumer classes with guidance as to how to hold corporations to account for competition law infringements.”
Boyle agreed, saying: “We anticipate further judgments on certification in the coming months with twelve applications for collective proceedings now filed.”
Upcoming cases include the Trucks Cartel claim, which will see the CAT consider the line between opt-in and opt-out claims, with further claims filed against, amongst others, tech giants Qualcomm, Apple and Google.