On 18 August 2021 the Competition Appeal Tribunal (CAT) approved the first application for a collective proceedings order (CPO) under the UK’s competition class action regime introduced in 2015, in Walter Hugh Merricks CBE v Mastercard Incorporated and Others.  The application was initially turned down by the CAT in 2017 but was remitted to it following a series of appeals, to be reconsidered against the principles set out by the Supreme Court in its ruling of 11 December 2020 (see our briefing here).  It has taken several years for the competition class action regime to get off the ground, but there are now a further 12 CPO applications before the CAT, several of which were recently heard and are awaiting certification decisions over the coming months.

In a win for MasterCard the CAT however refused Merricks permission to amend the claim form in order to include deceased persons in the class, which would have increased the class size from approximately 42.6 million consumers to approximately 59.8 million.  The CAT also refused to allow the recovery of compound interest that was included in the claim from the outset, on an aggregate basis, and would have more than doubled the estimated quantum of the principal claim (from an estimated £7.2 billion to £16 billion).

The CAT’s determination of these further issues shows that, despite the more permissive approach to certification taken by the Supreme Court, the CAT will continue to carefully consider and scrutinise all issues in CPO applications in its certification process.

Background to the case

The case involves an opt-out claim for £14 billion brought by Mr Merricks (the former Chief Ombudsman of the Financial Ombudsman Service) against MasterCard, on behalf of approximately 46 million customers who purchased goods and services from businesses in the UK that accepted MasterCard payment cards between May 1992 and June 2008. The claim follows on from the European Commission’s infringement decision relating to multi-lateral interchange fees (MIFs) (fees charged between banks in relation to transactions involving the use of a MasterCard card). The essence of the claim is that the MIF overcharge was passed on to consumers in the form of higher prices for goods and services.

In July 2017 the CAT refused to grant the CPO sought by Merricks on the basis that the claims were not suitable to be brought as a collective action. The CAT was not persuaded that there was sufficient data available for Merricks’ proposed expert methodology to prove the level of overcharge passed on to consumers.  Even if aggregate loss could be adequately calculated, the CAT did not see a plausible way of estimating individual loss at the damages distribution stage, in accordance with the principle that damages for breach of competition law must be compensatory in nature.

The CAT’s decision was overturned by the Court of Appeal and on a further appeal by the Supreme Court. The Supreme Court acknowledged the CAT’s important role as the ‘expert gatekeeper’, with a wide discretion to decide whether a competition collective action should be certified to proceed.  The Supreme Court however considered that the CAT had made errors of law when refusing to certify the claim in this case.

On the quantification of loss, the Supreme Court acknowledged that there were forensic difficulties and shortcomings in the likely availability of data in the case which affected quantification of the loss suffered.  However, such difficulties would not prevent an individual consumer’s claim going to trial and should therefore, in principle, not be treated as preventing the claims being brought collectively.

On the compensatory principle in the distribution of aggregate damages, the Supreme Court held that section 47C of the Competition Act 1998 expressly removes the ordinary requirement for the separate assessment of each claimant’s loss. Distribution of aggregate damages should be fair and reasonable, but one of the main reasons for the introduction of the power to award aggregate damages in collective actions is precisely to avoid the need for individual assessment of loss.

The CAT’s certification decision

Following the Supreme Court’s ruling in December 2020 the CAT had been expected to certify the claim on remittal, based on the principles set out by the Supreme Court.  MasterCard had also dropped its opposition to certification of the claims as eligible for inclusion in collective proceedings following the Supreme Court’s ruling.

In its ruling of 18 August 2021 the CAT decided that Mr Merricks should be authorised as the class representative and that the CAT will make a CPO on an opt-out basis, provided that a suitable undertaking as to liability for costs is given by the funder in case an award of costs were to be made in favour of MasterCard.

The CAT was also left to determine two further issues, as to whether Merricks could amend the claim form to extend the class to include persons who died before the claim form was issued and whether the collective proceedings could include a claim for compound interest.

On the deceased persons issue, the CAT rejected the argument that claims by deceased persons could be included on the basis of the class definition in the existing claim form, as it expressly excluded deceased persons.  Merricks therefore submitted a draft amended claim form, seeking to make a number of changes and amending the estimated size of the class from 46.2 million to 59.8 million.  The CAT agreed that, as a matter of policy, it should be possible to include deceased person in collective proceedings, but the normal way to do so would be for the claim to be brought by their estate through those authorised to represent it.  That was however not the position taken in the draft amended claim, which treats deceased persons as individuals within the class, and the CAT therefore dismissed the application for amendment.

On the compound interest issue, Merricks had argued that compound interest should be applied as any member of the class would at least at some point during the relevant period have borrowed or saved money, and the overcharge could have returned interest or reduced debt interest payments.  MasterCard submitted that the CPO should exclude claims for compound interest as this was not a common issue across the class and no plausible or credible method had been put forward for calculating the loss suffered.

The CAT held that compound interest constitutes a distinct head of loss, which must be separately established and cannot be presumed.  In the absence of a credible or plausible method of estimating what loss was suffered by way of compound interest on an aggregate basis, this head of claim was not suitable for an aggregate award and could not be fairly resolved in collective proceedings.


Stephen Wisking
Stephen Wisking
Partner, London
+44 20 7466 2825
Kim Dietzel
Kim Dietzel
Partner, London
+44 20 7466 2387
Kristien Geeurickx
Kristien Geeurickx
Professional Support Consultant, London
+44 20 7466 2544