This summer the Supreme Court confirmed it would hear Mastercard’s appeal of the long running consumer rights claim brought by Walker Merricks, with an estimated value of £14 billion. This will represent the final showdown that will hopefully provide much needed clarity on the future of UK group actions.
The proceedings follow the judgment by the Court of Appeal in April (which we previously analysed here) in which the Court, disagreeing with the Competition Appeals Tribunal (CAT), allowed Mr Merrick’s claim to proceed. In so doing it breathed new life into the collective action regime and set a lower hurdle to overcome for certification of future collective claims.
To recap, the Consumer Rights Act 2015 introduced the power to bring collective proceedings in the UK. Mr Merricks sought to bring a representative action for an aggregate award of damages and interest totalling £14bn on behalf of a wide class of individuals who purchased goods and services from businesses in the UK which accepted MasterCard between 1992 and 2008. The claim emerged from the EU’s decision in 2007 that MasterCard had infringed competition law through the imposition of a default multilateral interchange fee (MIF) charged between banks for transactions involving the use of a MasterCard card, but which was effectively paid by the retailers in the form of a bank service charge. The retailers ultimately passed on the MIF to their own customers in the form of increased prices.
Initially, the CAT refused to allow the action to proceed on the basis that: (1) it was not satisfied that it would be possible to evidence the level of MIF passed on from retailers to consumers in the form of price increases across the entirety of the UK during the relevant period; and (2) even if an aggregate award of damages could be calculated, the CAT could see no plausible way of reaching even a rough-and-ready approximation of the loss suffered by each individual claimant.
The Court of Appeal held the CAT erred in its decision to effectively conduct a mini trial at this early stage. It considered that, at the certification stage, Mr Merricks had to do no more than demonstrate that the claim had a real prospect of success and that the methodology used was at least capable of assessing an aggregate award of damages. It was wrong of the CAT to apply a more rigorous test, attempting to determine what was capable of being proved at trial, on evidence that had been identified but that had not yet been fully assessed.
It is not surprising that this case has found its way to the Supreme Court. The ramifications of any final decision will be significant, dealing, as it must surely do, with the fundamental test to be applied when determining if a party can bring a collective action, and possibly with the award of an incredibly large pool of damages. No date has been set for the Supreme Court to hear the case, but it will very likely do so during 2020. We will continue to monitor developments.