QE scores historic victory in the UK Supreme Court on class certification – Merricks v Mastercard

On Friday 11 December 2020, the UK Supreme Court handed down a historic and landmark judgment, delivering a decisive victory to Quinn Emanuel client Walter Merricks CBE in his efforts to bring a claim on behalf of a class of 46 million UK consumers seeking in excess of £14 billion in damages from Mastercard.

The highest court in the UK agreed with the Court of Appeal that the first instance court (the Competition Appeal Tribunal or “CAT”) made numerous errors of law in refusing to certify Mr Merricks’ mass consumer collective action (Mastercard Incorporated and others v Merricks [2020] UKSC 51). 

The claim was brought under the UK’s new collective action regime, introduced by the Consumer Rights Act 2015.  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 collective proceedings order (“CPO” or “certification”).

Mr Merricks made an application in September 2016 for a CPO to continue opt-out collective proceedings seeking £14 billion in damages for 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.

Mastercard appealed to the Supreme Court. 

 

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