The ‘overblown’ class action against Mastercard should not be allowed to go ahead as the claims are not suitable for collective proceedings, the Supreme Court heard this morning.

Mastercard is accused of overcharging 46 million consumers in a case worth an estimated £14bn. The proceedings hinge on fees imposed by the card issuer on businesses that accepted its debit and credit cards between 1992 and 2008. It is alleged that all customers who made purchases from merchants who accepted Mastercards - regardless of whether they used a Mastercard themselves - suffered loss as a result of higher retail prices.

The claim is brought by former financial services ombudsman Walter Merricks CBE and is being funded by New York based Elliott Management Corp.

Mark Hoskins QC, for Mastercard, said the individual claims should not be brought in collective proceedings because they are not suitable for an aggregate award of damages. Hoskins stressed the enormous scope of the claim and the difficulties in calculating the loss different consumers allegedly suffered.

‘In 1992, the start of the claim period, half a million retailers in the UK accepted payment by Mastercard cards. That had risen to some 800,000 merchants by end of claim period in 2008. In their oral evidence the experts accepted that there was likely to be significant variation in the extent merchants in different sectors of the economy…passed on any overcharge to their customers by way of higher retail prices,’ Hoskins said.

He added that within each sector of the economy there is a wide variety of businesses and they in turn might have had significantly different rates of ‘downstream pass-on’. Pass-on rates might also have varied geographically across the UK and fluctuated over the 16 year period, he said.

Asked whether the claim could go ahead on a more limited basis, Hoskins replied: ‘This hasn’t been suggested by Mr Merricks…What the actual application would require is the tribunal to conduct a full trial across all the sectors of the UK economy…If a narrower claim had been brought it might have gone through.’ 

Mastercard is challenging the Court of Appeal’s decision to remit Merricks' application for a collective proceedings order (CPO) to the Competition Appeal Tribunal. The latter refused the CPO application in 2017.

Hoskins said: ‘The tribunal is perfectly entitled to say this claim is so overblown we are not going to allow it to go through; it would not be a proper use of judicial time and it would not be fair on Mastercard.’

Proceedings, which are being heard by video link, continue.