Merricks v Mastercard: a positive result for claimants

In an article that appeared in February’s edition of ‘Litigation Funding‘ (published by the Law Society of England & Wales), Woodsford’s Alex Hickson looks at the UK Supreme Court‘s decision in Merricks v Mastercard dismissing Mastercard’s appeal and remitting the collective proceedings order (CPO) application back to the Competition Appeal Tribunal (CAT) – and what it means for claimants, defendants and litigation funders.

On 11 December 2020, the UK Supreme Court handed down the highly anticipated decision in Mastercard Incorporated and Ors vWalter Hugh Merricks CBE [2020] UKSC 51.The decision

dismissed Mastercard’s appeal and remitted the collective proceedings order (CPO) application back to the Competition Appeal Tribunal (CAT) to be reheard. The decision provides welcome, albeit long- awaited, clarity in respect of the standard to be applied by the CAT in deciding whether to issue a CPO pursuant to the Competition Act 1998.

The dispute as to the proper standard to be applied by the CAT
in issuing a CPO stems from changes to English competition law implemented by the Consumer Rights Act (CRA) in October 2015. The CRA amended the Competition Act 1998 to permit class representatives to bring ‘collective proceedings’ on behalf of consumers on an opt-out basis. Collective proceedings may only be continued on the basis a CPO is issued.

Since the introduction of these new laws, while several CPO applications have been filed, the CAT has heard only two (although some aspects of other CPO applications have been heard); Merricks and Dorothy Gibson v Pride Mobility Products Limited. Neither of those applications succeeded before the CAT.

The Merricks proceedings follow on from a decision of the European Commission in 2007, which found that interchange fees charged by Mastercard on transactions by merchants pursuant to an established scheme were unlawfully high, in breach of competition law. The

claim in question is pursued to recover all or a substantial part of the unlawful overcharge that the applicant says was passed on by merchants to their consumer customers.

The CAT initially denied certification, holding that the claims were not suitable to be brought as collective proceedings.The decision was appealed and in April 2019 the Court of Appeal overturned the decision and remitted the application back to the CAT to be reheard, finding that the CAT had demanded too much of the proposed class representative at the certification stage.The majority of the Supreme Court agreed, for the most part, with the Court of Appeal, finding that the CAT’s decision to refuse a CPO had been impaired by errors of law.

You can read the full article here.