In depth: Eight-year Mastercard saga rumbles on

A £200m settlement in the mammoth Merricks v Mastercard collective action was last week approved in the Competition Appeal Tribunal by acting president Mr Justice Roth, Hodge Malek KC and Rachael Mulheron KC.

The settlement brings an end – but only of sorts – to a legal battle spanning more than eight years, with over 30 rulings and orders, numerous Court of Appeal hearings and a Supreme Court judgment in 2020.

The collective action was brought by solicitor Walter Merricks CBE, a former head of the financial ombudsman service, on behalf of around 44 million UK consumers (at one stage more than 46 million) against Mastercard. It followed the European Commission’s 2007 finding that, between 1992 and 2007, Mastercard’s ‘multilateral interchange fees’ breached Article 101 of the EU treaty which bars direct or indirect fixing of prices or trading conditions. The claim sought damages and interest totalling £14.1bn and was certified by the CAT in May 2021. It was the first claim to be certified under the collective actions regime enabled by the Consumer Rights Act 2015.

The full and final settlement approved by the CAT – without any admission of liability on Mastercard’s part – requires Mastercard to pay £200m and Merricks to discontinue the collective proceedings. As well as approving the order, the judges said Merricks could step down as class representative.

Fallout from the pioneering claim continues, nevertheless. One issue that will attract ongoing attention is the intervention by funder Innsworth Capital. At the hearing, Charles Béar KC, for Innsworth, argued that the deal agreed was not a just and reasonable settlement. The judges disagreed, though the settlement amount was described by Hodge Malek KC as ‘disappointing’.

Detailed reasons will be given in the CAT’s written judgment, which is expected next month.

'Being a class representative is a huge responsibility. Mr Merricks has tirelessly fought for class members over the last eight years and that is appreciated'

Hodge Malek KC

The ruling will cover issues including the funder’s return, legal fees incurred and how the £200m will be distributed. Various options given during the approval hearing included dividing the settlement sum by the number of represented people – proposed by the funder – or a ringfenced pot of money to be divided by the number of represented people who submit claims, proposed by Merricks. Merricks’ suggestion could, assuming takeup is low, mean a higher payout for individuals who can be bothered to claim.

Eligible claimants include anyone who lived in England, Wales or Northern Ireland for at least three months between June 1997 and June 2008, and who bought goods or services from UK businesses that accepted Mastercard credit cards. For those who live in Scotland, the starting point is May 1992.

And there is still more to come.

Merricks’ Court of Appeal hearing over limitation will now not go ahead; but a ‘pass on’ trial at the CAT is listed for 24 March with a two-week time estimate. That trial, dealing with the Merchant Interchange Fee Umbrella Proceedings, will centre on card processing fees. Various merchants argue that, as a result of an alleged competition law infringement, they have paid more for a good or service from either Mastercard or Visa, or both (an allegation vigorously contested by Mastercard and Visa). It is argued some of that overcharge was passed on, wholly or in part, to consumers. Merricks was given permission to participate in those proceedings in May 2024, with the order made in July 2024, but he will no longer be a part of them.

Meanwhile, Innsworth’s arbitration proceedings against Merricks over his alleged failure to get the best deal are still potentially live. Mastercard has agreed to provide an additional £10m ‘for use exclusively in relation to any costs incurred/and or the resolution of the arbitral proceedings that are being brought by Innsworth’ against him.

There is also the potential, as with any judgment, of an appeal. As we await the CAT’s judgment, it is clear the case has raised questions about litigation funding and the credible expansion of class actions in the UK.

As the collective settlement approval hearing neared its end, tribunal member Hodge Malek KC paid tribute to Merricks. He said: ‘Being a class representative is a huge responsibility. Mr Merricks has tirelessly fought for class members over the last eight years and that is appreciated. The fact the outcome has been disappointing in the light of how the evidence and rulings have developed does not detract from that.’