Mastercard class action still alive after Supreme Court dismisses appeal

Mastercard: Case to be remitted to CAT

The Supreme Court has agreed that the decision which stopped in its tracks the massive £14bn Mastercard class action – the biggest opt-out claim in English legal history – was unlawful.

It backed the Court of Appeal’s decision to overturn the Competition Appeal Tribunal (CAT), finding that the tribunal had wrongly imposed a higher hurdle for the collective proceedings to jump than it would have done had the claimants been suing individually.

There was a 3:2 split, with Lords Sales and Leggatt dissenting. Lord Kerr, who backed the majority ruling given by Lord Briggs, died before it was meant to be handed down last Friday, but it was agreed that, as his view had been settled, the appeal should be dismissed rather than remitted for a rehearing.

The claim is a follow-on action after Mastercard was found to have infringed EU law by imposing charges (known as ‘interchange’ fees) on the use of Mastercard debit and credit cards. It is claimed that this increased costs for retailers and consumers.

It is brought on behalf of a class of 46m people who used a Mastercard over a 16-year period, but the CAT dismissed the application for a CPO from group representative Walter Merricks because it was not satisfied that his experts would be able to get the evidence to show that the illegal fees were then passed on to consumers in the form of higher prices.

Further, the CAT said there was “no plausible way of reaching even a very rough-and-ready approximation of the loss suffered by each individual claimant”.

The Court of Appeal ruled that the CAT “demanded too much” of the proposed representative at the certification stage in proving that the fees were passed on.

It said the making of a CPO did not prevent the CAT from terminating the collective proceedings later on if the experts did not have sufficient data.

There was also an error of law in the CAT considering that distribution must be carried out on some kind of compensatory basis, however approximate, the appeal court decided.

Agreeing in the main with the appeal court’s reasoning, Lord Briggs said there was nothing in the statutory scheme for collective proceedings which watered down the principle that claimants who have suffered more than nominal loss by reason of the defendants’ breach should have their damages quantified by the court doing the best it can on the available evidence.

“On the contrary, as the Court of Appeal observed, a refusal of certification of a case like the present is likely to make it certain that the rights of consumers arising out of a proven infringement will never be vindicated, because individual claims are likely to be a practical impossibility.

“The evident purpose of the statutory scheme was to facilitate rather than to impede the vindication of those rights.”

The statutory test of whether a claim is “suitable” for collective proceedings was best understood “in a relative rather than abstract sense”, Lord Briggs went on.

“It is clear that the CAT did not make any comparison between collective and individual proceedings when assessing the forensic difficulties lying in the path of the resolution of the merchant pass-on issue…

“If those difficulties would have been insufficient to deny a trial to an individual claimant who could show an arguable case to have suffered some loss, they should not, in principle, have been sufficient to lead to a denial of certification for collective proceedings.”

He added that the CAT wrongly treated the question of whether the claim was suitable for an award of aggregate damages “as if it were a hurdle rather than merely a factor to be weighed in the balance”.

The dissenting opinion said that the CAT was entitled to take the view that the claims were not suitable to be brought in collective proceedings “when the CAT was not satisfied that there was a realistic prospect of the applicant being able to apply its proposed economic methodology across the whole width, or substantially the whole width, of the proposed class”.

The decision means that the application for a CPO will be remitted to the CAT for a re-hearing, as the Court of Appeal had ordered.

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