Merricks v Mastercard: U.K. Competition Appeal Tribunal Gives Green Light For First Ever 'Opt-Out' Class Action

• Published date: 13 September 2021
• Subject Matter: Anti-trust/Competition Law, Litigation, Mediation & Arbitration, Antitrust, EU Competition , Class Actions, Trials & Appeals & Compensation
• Law Firm: Akin Gump Strauss Hauer & Feld LLP
• Author: Mr Richard Hornshaw, Mouna Moussaoui, Neal R. Marder and Sina S. Safvati

Key Takeaways

The United Kingdom's Competition Appeal Tribunal (CAT) recently granted the U.K.'s first ever Collective Proceeding Order (CPO), on an "opt-out" basis, in Walter Hugh Merricks CBE v Mastercard Incorporated & Ors 2021 CAT 28, thus allowing Mr. Merricks to proceed with the collective proceeding against Mastercard.

The CAT's judgment raised mainly three technical but economically significant points of detail, which are summarized below. But the real significance of the judgement is the milestone nature of the granting of a CPO, both in the context of this very significant claim and as a pathfinder for a pipeline of future high-value claims for breach of competition law across a range of industries and sectors.

Background

The unanimous judgment of the CAT in Merricks v Mastercard is the latest development in this legal saga. In 2016, Mr. Merricks, as proposed class representative, filed a '14 billion ($19.4 billion) claim for the alleged overcharging of more than 46 million U.K. consumers over a 15-year period. Mr. Merricks filed the claim as an "opt-out" collective proceeding (a mechanism introduced by the Consumer Rights Act 2015) against Mastercard, meaning the action would be pursued on behalf of a class unless individual members opted out.

Mr. Merricks relied on the European Court of Justice's decision that Mastercard had breached competition law by charging businesses excessively high multilateral interchange fees for cross-border transactions between 1992 and 2008.

In 2017, the CAT declined to certify the claim¹. The CAT concluded that Mr. Merricks had satisfied the condition to act as class representative (known as the "authorization condition"), but had failed to satisfy the "eligibility condition" (the requirement that the claims are eligible for collective proceeding). Following appeals to the Court of Appeal of England and Wales and the U.K. Supreme Court, the landmark Supreme Court judgment²held that the CAT had misinterpreted the law and remitted the case to the CAT for reconsideration. For the background to and implications of that judgment, see this prior article.

The "Authorization Condition" - Legal Funding

Although the CAT had, in 2017, already found that Mr. Merricks satisfied the authorization condition, it reconsidered the question in light of Mr. Merricks' new litigation funder and litigation funding agreement (LFA).

The CAT focused on the terms of the LFA, citing the requirement that Mr. Merricks act fairly in the...