Mastercard vs. Merricks – a landmark step closer to US-style class actions

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Mastercard vs. Merricks – a landmark step closer to US-style class actions

Published 22 diciembre 2020


In December 2020, after a long wait for interested parties, the Supreme Court handed down its landmark judgment in the case of Mastercard Incorporated and others vs. Walter Hugh Merricks CBE.  In appealing the ruling of the Court of Appeal, Mastercard had sought to reinstate the earlier decision of the Competition Appeal Tribunal (“CAT”) which prevented Mr Merricks from bringing collective proceedings against the financial services giant.  The Supreme Court has dismissed Mastercard’s appeal, remitting the matter back to the CAT for a fresh re-hearing.  Not only does the decision have the potential to directly affect up to 46.2m UK citizens, it has even broader consequences in relation to the ability of claimants to bring “class actions” more easily in this jurisdiction.

Collective Proceedings

In 2012 the government sought to improve the regime allowing individuals to seek redress for anti-competitive behaviour.  The move was grounded in a wish to improve access to justice for individual consumers, for whom the actions of major multinationals may only have resulted in a negligible proportion of overall losses caused by anti-competitive behaviour.  The prohibitive costs of individual litigation had prevented consumers and other claimants with relatively small losses from accessing justice in respect of their claims.  As Judge Posner shortly put it in a decision of the US Seventh Circuit Court of Appeals: “only a lunatic or a fanatic sues for $30.”[1]

The Consumer Rights Act 2015 and the Competition Appeal Tribunal Rules 2015 transformed the landscape of UK Competition Law: arming consumers and businesses with the necessary tools to bring collective claims more easily. 

Section 47B of the CAT Rules 2015 gives the CAT the power to grant a collective proceedings order (“CPO”) where the person bringing the action could also act as the class representative in that action, where the claims raise “the same, similar or related issues of fact or law”, and where they are “suitable” to be brought collectively.  Among other factors, the CAT considers the need for fairness and an efficient resolution of common issues, the size and nature of the proposed claimant class, and whether aggregate damages could reasonably be awarded.

Crucially, the 2015 Rules also extended the CAT’s jurisdiction to include collective opt-out actions as well as opt-in actions in the context of follow-on and standalone claims.  The CAT could now hear claims brought on behalf of entire groups of consumers who were automatically considered to be claimants unless they actively chose not to participate.

At the time, news outlets praised the new framework as “claimant friendly”, going as far as to label it akin to “US-style class action suits”.  While this new framework does indeed bear some theoretical resemblance to the US model, the UK has as yet been reluctant to make the most of it.  However, recent signs indicate that the tide may be turning, with the UK Courts becoming more open to very large US-style opt-out claims.  One of the most significant cases bringing about this change was the Mastercard Litigation.

The Mastercard Litigation

Mr Merricks’ case centred on Mastercard’s payment card scheme, which enabled the buying and selling of goods and services by credit or debit cards.  Mastercard facilitated a series of linked transactions between consumers, merchants and their banks, paid for by scheme fees ultimately remitting to Mastercard itself.  Since May 1992, Mastercard had set its own rate for the Multilateral Interchange Fee (“MIF”), the liability for which was passed onto the individual consumer.  In short, a fraction of every debit or credit card payment ended up in Mastercard’s pockets.

In 2007 the European Commission found that the default rate of Mastercard’s “Intra-EEA MIF” restricted competition in the European Community.  Mr Merricks alleged that the level of the UK MIF, affecting only UK banking customers, was dictated by the infringing Intra-EEA MIF.  The UK MIF was, therefore, unlawfully set, and resulted in the illegal overcharging of UK consumers from 1992 – 2007.

In 2016 Mr Merricks applied to the CAT for a CPO which would have had the effect of combining every follow-on action by UK claimants arising from the European Commission’s 2007 decision.  Mr Merricks claimed that the issues arising were common amongst the entire adult population of the UK who bought from businesses accepting Mastercard payments between 1992 and 2008.  Mr Merricks argued that if a CPO was not granted, none of those 46.2m people would practically be capable of seeking redress for Mastercard’s breach.  If it had been granted, the CPO would have allowed the claimant class to bring a gargantuan single suit against Mastercard, represented and conducted by Mr Merricks.

At first instance the CAT dismissed the application for a CPO, citing the unsuitability of the claims for collective proceedings.  The CAT concluded that aggregate damages were not suitable in circumstances where the entire adult population of the UK over a 16-year period could be due a share of the compensation.  Furthermore, the method of distribution proposed by the claimant could not be applied on “a sufficiently sound basis.”

Fortunately for Mr Merricks and other consumers affected by the level of the UK MIF, the Court of Appeal took several legal and jurisdictional issues with the CAT’s decision.  Mastercard’s further appeal to the Supreme Court has been unsuccessful.

The Decision

In what is considered to be a contentious but unanimous decision,[2] the Supreme Court upheld the Court of Appeal’s ruling and remitted the case back to the CAT.

The Court questioned why an issue around quantifying loss at an early stage in collective action proceedings should be fatal, where such an issue in individual claims, brought under the Civil Procedure Rules, would not be.  In his leading opinion, Lord Briggs highlighted that where a finding of statutory breach of duty had already been made, an individual claimant in the early stages of litigation would only need to establish that the issues raised were triable, and had resulted in more than nominal losses.  The purpose of the CAT Rules was, after all, to make life easier for collective action litigants, not harder.

Moreover, the Supreme Court found that the CAT’s decision was vitiated by error of law.  The CAT had wrongly treated the suitability of the claims for aggregate damages as a hurdle to certification, rather than a factor to be balanced with others. 


The Supreme Court’s decision in Mastercard represents a seismic step towards the US-style model of class-action litigation. There are a number of extant multi-Claimant claims in the competition sector which were, effectively, stayed pending this decision, which are now likely to be able to proceed efficiently with the use of CPOs. The decision also has the potential to open the floodgates for collective opt-out actions by many claimants, whose ability to participate in, and benefit from, large-scale competition damages claims will be greatly increased. 

Whilst both litigation funders and advocates for access to justice will welcome this decision, the prospect of the Mastercard CPO being granted is also likely to elicit concerns from sceptics about how this may work in practice and, of course, the associated costs of such large-scale litigation.

We await the CAT’s re-hearing of Mr Merricks’ case eagerly, not least because of the potential effect it might have on such a vast class of claimants.

[1] Carnegie v Household International Inc (2004) 376 F 3d 656, 661

[2] Lord Kerr, who agreed with Lord Briggs, died shortly before the judgment was handed down.  Rather than forcing a re-trial, Lord Sales and Lord Leggatt agreed to dismiss the appeal despite holding dissenting views.  Had their lordships split the court or demanded that a fresh panel by convened, a very different decision may have been reached.


Jamie Tomlinson

Jamie Tomlinson

London - Walbrook

+44(0)20 7894 6014

Laura Berry

Laura Berry

London - Walbrook

+44 (0) 20 7894 6343