Slim hope of resurrecting Mastercard class action

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Jul 24, 2017
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Walter Merricks claimed that the company’s “multilateral interchange fee” forced all UK consumers to pay higher prices

Andrew Matthews/PA

A former City watchdog was deciding over the weekend whether he should appeal the rejection of his attempt to bring a £14 billion class action against Mastercard.

The Competition Appeal Tribunal dealt what lawyers described as a “real setback for the collective proceedings regime” when it dismissed an application brought by Walter Merricks, the former financial services ombudsman. Merricks had claimed that the credit card company’s “multilateral interchange fee” forced all UK consumers to pay higher prices as shopkeepers passed on the charge in an across-the-board policy applied to all goods.

Merricks – who is also a qualified lawyer – said he was “surprised and disappointed” by the ruling. “The new collective action regime was introduced by the Consumer Rights Act to overcome the difficulty for consumers seeking to recover losses from competition law infringements,” he said. “I am concerned that this new regime, designed to benefit consumers, may never get off the ground.”

Merricks and his legal team at the London office of the US law firm Quinn Emanuel, argued that the granting of the collective proceedings order would have allowed 46 million British consumers to recover the alleged losses. “I am actively considering with my advisors and litigation funders the possibility of an appeal,” said Merricks, referring to the fact that the action was being funded by professional third-party backers.

However, independent commentators were not optimistic. “This is a real setback for the collective proceedings regime,” said Marc Israel, a partner at the London office of US law firm White & Case. He pointed out that the Mastercard challenge was the second case that had failed after an action earlier this year alleging a mobility scooters cartel was also rejected. “It may well deter other potential class representatives from seeking to act on behalf of potential claimants and incurring the time and expense in seeking to become a representative in such cases," said Israel.

John Schmidt, a partner at the City office of Scottish law firm Shepherd & Wedderburn, pointed out that the tribunal judge, Sir Peter Roth, who also sits in the High Court, was “one of the most experienced in the competition field and most of the decision will be about applying his discretion. So it is hard to see this being successfully appealed”.

However, forecast Schmidt, the ruling did not mean that “Mastercard is off the hook altogether”. He pointed out that the company was battling parallel claims from retailers. “Mastercard was already ordered to pay Sainsbury’s a significant amount of money and has settled a case with Tesco, presumably also making a significant payment to avoid litigation,” he said.

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