The UK Supreme Court penned down a landmark decision on 11th December 2020 in Merricks against MasterCard, rejecting the submission of MasterCard against the conditions defined by the UK Competition Appeal Tribunal (CAT) to certify class actions. The case is a landmark £14 billion mutual opt-out process. It began in 2016. The appeal for a Collective Proceedings Order will now be referred to the CAT for re-heard. In 2007, the European Commission ruled that MasterCard breached the competition laws of the European Union with respect to the setting of Multilateral Interchange Fees (‘MIFs’) paid by banks for purchases using MasterCard issued credit and debit cards .
In September 2016, Mr Merricks applied to the CAT for a Collective Proceedings Order on an opt-out basis pursuant to section 47B of the Competition Act 1998 on the basis of the EC Judgment. The application was rendered on behalf of all persons over the age of 16 who had lived in the United Kingdom for a continuous duration of at least three months and who between 22 May 1992 and 21 June 2008, bought products or services from UK merchants who accepted MasterCard, which are around 46 million consumers. The proposed class covered all purchasers at such retailers during the relevant time, regardless of whether or not they used the MasterCard payment card to make the order. Mr. Merricks claimed that MasterCard’s illegal actions resulted in traders paying higher MIF’s which traders passed on to customers by increasing costs for the goods or services they provide. The losses claimed from MasterCard were valued at over £14 billion.
The decision of the Supreme Court on the approach to determining whether or not an argument is acceptable for the CPO certainly makes for a more permissive approach and a lower threshold than was historically defined by the CAT. In that context, it is likely to allow law firms and litigants to take more class action. In specific, clarifying that the suitability test is a relative assessment, since certain claims would be assisted between joint or individual prosecutions where the individualized damages are low. Lord Sales and Lord Leggatt disagreed with this part of the logic of Lord Briggs, observing that it could “very significantly reduce the role and utility of the safeguard for certification. “In comparison, the broad approach to the Commonality Evaluation and the fact that the data gaps found are not a basis for denying approval often point to a more permissive approach. The Court also explained that the merits of the substantive case is not a matter for the decision as to whether or not to issue a CPO, even though the merits of the decision as to whether a CPO should be rendered on an opt-in or an opt-out basis are important.
There are, however, parts of the decision that the defendants are welcome to make. The CAT would not need to determine at the CPO level whether a particular claim is eligible for an overall payment of reward. This will remain a key logistical concern in certain contexts with very broad groups. If, after awarding a CPO, or after assessing fault, the claim is found to be unsuitable for an overall payment of damages, so the defendant law firm will face the unenviable challenge of independently proving losses. Second, there could be expanded scope for claiming that lawsuits made on behalf of a class of firms lack the ‘Suitability Test’ and, as has been seen in multiple antitrust loss claims, even in MIF cases, such plaintiffs are willing to pursue claims beyond the CPO regime. Third, there will be chances for claimants to examine the experts of the members at the level of the CPO, even by cross-examination. Unlike the Court of Appeal, the Supreme Court did not conclude that, by allowing cross-examination, the CAT had erred in holding a “mini-trial.”
Overall, the decision involves putative defendants. A main battleground of these claims will come at the post-CPO level where the claimants will need to think strategically about how to limit and reduce the reach of the argument that has been accepted. The ruling of the Supreme Court is a big move forward, but we are also in the early stages of this current class action regime.