Mastercard litigation: £2 for each claimant, up to £100m for funder

Litigation funders backing the long-running group claim against Mastercard will collect up to £100m, it emerged today.

A legal notice relating to proceedings brought by class representative Walter Merricks confirmed that under a proposed settlement, Mastercard has agreed to pay £200m in exchange for the opt-out class representative action being discontinued. The settlement is offered without any admission of liability.

Out of the settlement sum, £100m would be distributed equally to everyone who submitted a claim, provided they meet certain conditions. Some 44 million people are eligible, meaning that in the unlikely event they all come forward, they would be entitled to £2.27 each. Mastercard proposes that the maximum payment for each claimant be capped at £45, while Merricks suggests a £70 cap. 

Around £45.57m would be paid to litigation funder Innsworth Capital, which financed the proceedings, to cover incurred and future costs. A further £54.43m could be paid to Innsworth as a return on the funds it provided, depending on the number of people who come forward to make a claim.

Innsworth said last month that it would challenge the settlement agreement between Mastercard and Merricks when it goes before the Competition Appeal Tribunal. The claim had originally been valued at £10bn but Merricks’ solicitor denied there had been any rush to settle, saying that the ‘realistic’ value had become clearer as the case progressed.

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. The starting point is May 1992 for those who lived in Scotland.

The settlement application will be considered by the Competition Appeal Tribunal at a hearing on 19 and 20 February, with a third day held in reserve. 

The litigation, arising from card processing charges, has taken almost nine years and been subject to numerous hearings and judgments, including by the Supreme Court. It has raised questions about the merits of class actions and in particular the involvement of litigation funders enabling them.

Seema Kennedy, executive director of business-backed campaign Fair Civil Justice, said the case prompted ‘serious questions to be asked about whether the system is working in the best interest of consumers or the courts’.