UK: A Class Of Their Own: Merricks v Mastercard Incorporated & Others [2019] EWCA Civ 674

Despite the appetite for class actions in the United States and Canada, the UK has often been seen as reluctant to embrace the concept of collective proceedings and criticised in some quarters for making it difficult to pursue such claims. However, a collective action regime was brought in by the Consumer Rights Act 2015 (which amended the Competition Act 1998) in respect of competition law claims. In a recent landmark judgment against the company Mastercard, the Court of Appeal has effectively lowered the previously high bar for obtaining an order that claims may proceed collectively, thus providing a potential fertile jurisdiction for future class actions.


Following an EU Commission decision, Mastercard was found to have acted in breach of competition law by setting multilateral interchange fees which were charged between banks for transactions involving the use of a Mastercard branded card. Through the transactional structure in place, these fees, in varying degrees and over a number of years, were ultimately "passed on" to the consumer - the customers of merchants that accept Mastercard.

Class action

In 2016 a former Financial Ombudsman, Walter Merricks CBE, sought to bring a £14bn class action on behalf of 46 million customers before the Competition Appeal Tribunal (CAT). The collective proceedings were brought on an opt-out basis and an aggregate award of damages, representing the loss suffered by the class as a whole, was sought, rather than individual damages. In order for the action to proceed Mr Merricks had to satisfy the CAT that it was suitable for collective proceedings and obtain a Collective Proceedings Order ("CPO").

Obtaining a CPO was a key step, as it will be in most claims of this type: individual claimants in many cases will be unable to fund the costs of litigation to obtain relatively (or very) modest damages, whereas litigation funding may be available for a large class action of significant value. On the other side of the coin, the costs of collective proceedings are likely to be a considerable burden to a defendant.


Following a preliminary hearing in 2017 the CAT did not accept the claims as being suitable for collective proceedings for two reasons: (1) It held that there was a lack of data to determine the level of "pass-on" to consumers; and (2) There was an absence of plausible means of calculating the individual loss suffered by claimants. Permission to appeal was refused by the CAT on the basis that the legislation provided no route to appeal. (Our previous article on this decision is available here).

However, Mr Merricks was granted leave to appeal by the Court of Appeal itself, which held that it did have jurisdiction. The claimants submitted that the decision of the CAT was wrong, on the basis that it adopted:

  • the wrong approach to the assessment of the evidence and strength of the case, and
  • the wrong test in relation to distribution.

Court of Appeal judgment

The Court of Appeal noted that the CAT was right to treat the Canadian jurisprudence on certification of class actions as informing the correct approach, as the similarities between the Canadian and UK regimes were obvious. The CAT had rightly applied the Canadian Supreme Court decision of Pro-Sys Consultants v Microsoft Corporation [2013] SCC 57, although the Court found that it had not done so correctly.

The claimants had submitted a "top down" methodology for calculating the aggregate sum which would be claimed as damages. Given this was a preliminary (and therefore pre-disclosure) stage of the proceedings it was acknowledged that further data would be required and made available should the matter proceed.

The Court held that the "top down" method had the support of Microsoft and the same approach should be adopted in section 47B of the Competition Act 1998. The issue of whether the overcharge had been passed on to consumers generally and in what amount was a common issue to all individual claims. Requiring each individual to establish loss in relation to their own spending would run counter to the legislation, requiring an analysis of pass on at a detailed individual level that was unnecessary when an aggregate award was claimed.

The Court held that if, following Microsoft, the function of the CAT at the certification stage is to be satisfied that the proposed methodology is capable of offering a realistic prospect of establishing loss to the class as a whole, then that requirement had been satisfied. The availability of data sufficient to allow the methodology to be operated on a sufficiently sound basis ought, at certification stage, to be looked at in terms of what information could be made available for the trial.

The Court held that the CAT had subjected expert witnesses on behalf of the claimants to extensive cross-examination as to the methodology and data available at that time. In doing so the CAT had effectively carried out a "mini-trial" at an inappropriate stage of the proceedings; it would be for the CAT during a full hearing at a later stage to consider and test all the evidence in detail.

In rejecting the "mini-trial" approach of the CAT, the Court held that the CAT had required the claimants to establish more than the reasonably arguable case that would have been necessary had Mastercard applied for a strike-out.

The Court also noted that, as highlighted in the Canadian cases, certification is a continuing process, and therefore the CAT was not prevented, where a CPO is made, from terminating the collective proceedings subsequently, for example if the claimants are unable to access sufficient data for the experts to calculate the rate of pass-through.

Lack of redress

The CAT found that even if there were sufficient data to support the claimants' methodology it would be impossible to correctly distribute any aggregate award of damages to individual claimants. This was because the amount of loss would vary from customer to customer due to a number of factors such as individual spending levels and the number of years active etc.

The Court held that the CAT had adopted Mastercard's position that the damages must be awarded and distributed on the basis of the legal principle that the purpose of damages is to restore a party to its position had wrongdoing not occurred. The Court of Appeal rejected this argument on the basis that the very purpose of bringing a class action is to aggregate the level of damages sought, and they may be assessed by reference to the loss suffered by the class as a whole. More importantly, the Court held that the CAT need not have concerned itself, for certification purposes, with the distribution of aggregate damages.

The Court noted that in the present case where the CAT refused to allow a class action this was likely to prevent someone from bringing a claim for damages at all.

What next for Mastercard?

The Court of Appeal ruled that the matter must now be referred back to the CAT, to once again consider suitability for a CPO.

The Court refused Mastercard leave of appeal to the Supreme Court, although it is reported that Mastercard intends to apply to the Supreme Court for permission.

The impact on class actions?

This is the first judgment in relation to the operation of the competition class action regime under the Competition Act 1998 in the UK, and it will no doubt be welcomed by those who support the use of and growth of class actions within the UK, including litigation funders. The CAT's refusal to certify this (and a previous matter) as suitable for a CPO had led to doubts about whether the regime was operating as intended.

Whilst the outcome of the judgment means that the bar has been lowered for obtaining a CPO, it also makes clear that certification is an ongoing process, meaning that an action that initially meets the standard may have its CPO over-turned as the evidence develops, and once significant costs have been incurred.

It will be interesting to see how the regime develops, and whether this judgment encourages further attempts to bring collective proceedings. We will watch this space.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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