A £14 billion class action against Mastercard for allegedly overcharging 46 million British consumers over a 16-year period has been given the green light to proceed by the UK Supreme Court, dismissing an appeal from the payments company.
The action was brought by former financial ombudsman Walter Merricks and claims that over 46 million UK consumers paid higher prices in shops between 1992 and 2008 because of allegedly excessive transaction fees charged by Mastercard.
The Supreme Court’s judgement on Friday upholds a previous decision by the Court of Appeal in 2019 to dismiss an appeal brought by Mastercard after losing a lengthy appeal against a 2007 European commission ruling that its fees were anti-competitive.
“Mastercard has been a sustained competition law breaker, imposing excessive card transaction charges over a prolonged period in a way it must have known would impose an invisible tax on UK consumers,” Merricks said in a statement, adding that the prices of “everything we all bought from 1992 to 2008 were higher than they should have been”.
Merricks claimed that the maximum payout in the class action would be £300 for anyone able to prove that they were in the UK in the 16 years between 1992 and 2008. Around 46 million adults could qualify for this payout without needing to have ever held a Mastercard.
Mastercard said in a statement that it fundamentally disagreed with the claim, which it described as being pushed by “hit and hope” American lawyers.
“Mastercard will be asking the Competition Appeal Tribunal (which will oversee the case) to avert the serious risk of the new collective action regime going down the wrong path with a case which is fundamentally flawed,” the company said.
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The ruling quickly drew attention from legal experts.
"This is a very important judgment which keeps alive the practical utility of the collective action regime,” Rob Murray, Partner at Mishcon de Reya, remarked. “It requires the CAT to reconsider its decision on certification, paying particular attention to its approach to the most important error of law: that an arguable claim cannot be dismissed simply because of perceived difficulties in assessing aggregate damages should it succeed.
“There is nevertheless no guarantee that certification in this case will be granted, although that seems on balance more likely – particularly where there may be no other mechanism for redress for consumers. Plus of course, certification is the first step: whether a claim will ultimately succeed will remain uncertain.”
Sarah Houghton, Partner at Mishcon de Reya, also commented on the news. "The CAT's role as the "expert gatekeeper" with sole jurisdiction over these types of collective claims for competition law damages has certainly been given a shot in the arm as a result of this. The judgment will also likely give the CAT confidence in its approach to other cases where complex issues of certification need to be addressed,” she said.
“Finally, the judgment recognises that collective actions are an important deterrence tool. Companies, now more than ever, will need to be mindful of the potential for collective actions. The extraordinary cost to businesses of a breach of competition law has the potential to dwarf any fine from a competition authority."
