The litigation funder behind the marathon Competition Act group claim against Mastercard - for which a settlement agreement was announced this week - has been accused of attempting to take control of the litigation. US-based Innsworth Capital yesterday said it would challenge the settlement agreement between Mastercard and claimant Walter Merricks when it goes before the Competition Appeal Tribunal for approval in the coming weeks.

In a statement responding to Innsworth’s announcement, Merricks’ solicitor Boris Bronfentrinker of litigation firm Willkie Farr & Gallagher said: 'After nearly nine years of litigation, which has involved numerous hearings before the Competition Appeal Tribunal, multiple appeals before the Court of Appeal, and a visit to the Supreme Court, that has resulted in various judgments that have provided greater clarity on the value of the claim brought by Mr Merricks against Mastercard, Mr Merricks and Mastercard have agreed a settlement of the claim that will see money returned in to the hands of UK consumers.

'Any suggestion that after nearly nine years of litigation and all the hearings and judgments that have occurred, there has been any rush to settle is frankly absurd. To the contrary, based on the actual evidence that has now come to light and that was not previously publicly available, the realistic value of the claim has now become much clearer. This will all be set out in the application and supporting evidence that will be filed with the tribunal to allow it to consider whether to approve the settlement.’

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The settlement figure has not been revealed ahead of the CAT hearing but it has been widely reported to be worth £200m, one fiftieth of the £10bn value originally put on the claim. Innsworth described the figure as ‘too low’.

Describing Innsworth’s statement as 'unfortunate but not surprising', Bronfentrinker said: 'Whilst the vast majority of litigation funders understand and respect the limits of their role in litigation, that is not the position of Innsworth. The decision to oppose the settlement and to go public with that, attacking Mr Merricks, is the latest in a sustained campaign it has engaged in to inappropriately pressure and seek to influence Mr Merricks’ decision making in order to take control of the litigation. It is good that this has all come to light and will be considered by the tribunal when it comes to assess the settlement that has been agreed with Mastercard. The role of litigation funders, and their ability to seek to influence and control litigation so as to advance their financial position over and above all other considerations, raises important public policy issues that go to the integrity of the collective action regime.

'The bottom line is that after many years of hard litigation, Mr Merricks has concluded a settlement that he considers should enable UK consumers that come forward to participate in the settlement distribution, to recover in the region of £40 to £50 each. This is a very good outcome for UK consumers, they get money they would not otherwise have got had Mr Merricks not taken on this litigation against Mastercard. We are confident that the tribunal will approve the settlement. Innsworth’s opposition, and its desire that Mr Merricks continue with risky litigation that could result in UK consumers recovering significantly less, or even nothing - simply because Innsworth is unhappy that the settlement that has now been agreed may not allow it to recover the hundreds of millions it considers it should receive - has nothing to do with advancing the interests of UK consumers, and is all about funder greed.'

Innsworth’s decision to oppose settlement has caused consternation in parts of the litigation funding market, which is now under scrutiny as the government considers the question of regulation. Mohsin Patel, co-founder at litigation finance broker Factor Risk Management, said it was unclear how the CAT would approach any objection from a funder. 'What, if any, standing does a funder have to challenge an agreed settlement that has been made between two opposing but consenting parties acting upon advice?'

The size of the settlement will also raise questions about what the nine-year litigation achieved. Andrew Bartlett, partner at international firm Osborne Clarke, said: 'Even if there were £150m left after paying costs and the funder, that would be just over £3 for each of the 46 million consumers on whose behalf the action was brought, and it could be considerably less. This very much begs the question whether the pursuit of the claim has achieved anything of significance for the consumers on whose behalf it was brought.’

Seema Kennedy,  executive director of business-backed campaign Fair Civil Justice said: 'The settlement figure suggests around £4 per eligible claimant. Depending on how much the lawyers and class action investors take before the claimants are paid, this £4 figure could drop. 

'Furthermore, bearing in mind the huge amount of taxpayer money invested in running this through the civil court system for many years, there are serious questions to be asked about whether the system is working in the best interest of consumers or the courts.'

 

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