UK Competition Appeal Tribunal hands down a further landmark judgment in favour of QE client Walter Merricks CBE
On Wednesday, 18 August 2021, the UK Competition Appeal Tribunal (“CAT”) handed down a further landmark judgment in favour of Quinn Emanuel client Walter Merricks CBE. The CAT’s decision is the latest in a series of high-profile decisions concerning Mr Merricks’ efforts to bring a claim on behalf of a class of up to 46 million UK consumers seeking billions in damages from Mastercard - the largest claim in English history - arising out of its anticompetitive conduct in relation to the setting of interchange fees at inflated levels.
Following the historic decision of the UK Supreme Court in December 2020 (Mastercard Incorporated and others v Merricks [2020] UKSC 51), in which the highest court in the UK agreed with the Court of Appeal that the CAT had made numerous errors of law in refusing to certify Mr Merricks’ mass consumer collective action in 2017, the case was remitted back to the CAT for reconsideration of whether Mr Merricks’ claim should be certified to proceed as a collective proceeding in the UK. In a unanimous decision, the CAT found that - applying the standard now having been set down by the Supreme Court and exercising its “gatekeeping” function - Mr Merricks case was both eligible and suitable to be certified, and that it should therefore proceed. In achieving this result, Mr Merricks is the class representative to obtain a collective proceedings order (or “CPO”) since the collective proceedings regime was introduced by the Consumer Rights Act 2015, and in doing so has made English legal history.
By way of further background, the intention of the new regime was to enable principally end consumers to obtain redress for breaches of competition law by allowing such claims (that individually are economically unviable due to their size) to be brought by a “class representative” on an “opt-out” basis. Such claims are only permitted if the CAT is satisfied that the claim is suitable to proceed on a collective basis, and grants a CPO.
Mr Merricks made an application in September 2016 for a CPO to continue opt-out collective proceedings seeking damages on behalf of a class of 46 million UK consumers against Mastercard for breach of competition law. The claim follows on from the finding by the European Commission in 2007 that Mastercard’s intra-EEA multilateral interchange fees (“MIFs”) infringed EU competition law in the period 1992 to 2007. This follow-on consumer claim should have been the archetypal case for the new regime. However, despite the scale of losses suffered, the CAT refused certification, on the grounds that: (1) while Mr Merricks’ experts had a sound methodology for determining the degree to which the anticompetitive MIFs were passed on by merchants to consumers across all sectors of the economy, the CAT was not persuaded that data would be available to generate a sufficiently reliable result; and (2) the method proposed for distributing the aggregate award of damages to the class was not sufficiently ‘compensatory’, in that it did not take account of the actual loss suffered by each of the class members. This left 46 million UK consumers effectively without redress, and the CAT’s reasoning risked making mass consumer class actions unviable from the very outset.
The prospects of a successful appeal against the refusal to certify were particularly challenging for two reasons. First, the statutory wording made doubtful whether a refusal to certify could be appealed. Indeed, the Tribunal’s Guide to Proceedings expressly excluded an appeal, other than by way of judicial review. Second, the legal test for certification affords the CAT wide discretion, raising doubts as to whether there was an appealable point of law. Having persuaded the Court of Appeal that there is a right of appeal against a refusal to certify, Quinn Emanuel secured a unanimous decision in the Court of Appeal that the CAT had erroneously applied the legal test for certification, defeated Mastercard’s appeal to the UK Supreme Court, and obtained certification for Mr Merricks’ in the first opt-out certification of claims in the UK.
Mr Merricks’ case will now proceed to the next procedural phase, with the first task being for Mr Merricks to further publicise the claim to the class, and allow any would-be class members the opportunity to opt-out should they wish to do so. Looking ahead, Quinn Emanuel looks forward to representing Mr Merricks to secure what should be the largest damages award in English legal history from Mastercard on behalf of the class of UK consumers.