A huge competition claim pitting 46 million consumers against Mastercard has been revived after the Court of Appeal granted permission to appeal a tribunal's decision to dismiss the case.
The case, brought by former financial services ombudsman Walter Merricks CBE, was brought on behalf of consumers alleged to be victims of excess ‘interchange fees’.
The £14bn damages claim was the largest sum claimed in English legal history and one of the first cases brought under the Consumer Rights Act 2015, which provides for so-called ‘opt-out’ collective proceedings on behalf of a class of individuals.
However the claim was thrown out by the Competition Appeal Tribunal (CAT) in July 2017. The CAT accepted Mastercard’s arguments that, even if loss had been suffered and could be estimated across the whole class, there was no way of ensuring that a class member would receive distribution of an amount compensating any actual loss suffered.
The Court of Appeal has today granted permission to appeal. The CAT ruling will now be set aside. The court found that distribution is a matter for the trial judge to consider following the making of an aggregate award and therefore it was both premature and wrong for the CAT to have refused certification by reference to the proposed method of distribution: an error compounded by their view that distribution must be capable of being carried out by some means which corresponds to individual loss.
Merricks, a former financial ombudsman, is represented by City firm Quinn Emanuel Urquhart & Sullivan. Boris Bronfentrinker, partner at the firm, said: ‘Whilst it had been commented that the claim against Mastercard was overblown, the Court of Appeal has today definitively determined the opposite, recognising the need for mass consumer collective actions to be able to be pursued. This is a satisfying victory, but the focus now shifts to securing compensation for the 46 million UK consumers who lost out as a result of Mastercard’s action.’
The action was initially financed by litigation funder Gerchen Keller Capital, now owned by Burford Capital, which was to provide upfront costs of up to £36m. If successful the funder stood to make whatever was the greater of £135m or 30% of the proceeds of the case up to £1bn, plus 20% of the proceeds over £1bn. A new funder, Innsworth Litigation Funding, has now taken on the case though the financial details have not been made public.
Merricks said: ‘It’s now time for Mastercard to admit the damage they did, to apologise to the British public, and to agree to pay the compensation they owe. I’m particularly pleased that the judges recognised that the CAT’s decision would have frustrated the will of Parliament when it passed the Consumer Rights Act – that there should be an effective route for consumers to be compensated when businesses break competition law.’
A spokesperson for Mastercard said: 'This decision is not a final ruling and the proposed claim is not approved to move forward, rather the court has simply said a re-hearing on certain issues should happen. Mastercard continues to disagree fundamentally with the basis of the claim and we believe UK consumers receive real value from the security, convenience and consumer protection of our payment services.'