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Competition Appeal Tribunal grants first opt-out Collective Proceedings Order

  • United Kingdom
  • Competition, EU and Trade
  • Financial services disputes and investigations
  • Litigation and dispute management


Walter Hugh Merricks CBE v Mastercard Incorporated and others [2021] CAT 28


  • With effect from 1 October 2015, the Consumer Rights Act 2015 (the " Act ") introduced changes to the group actions regime in private competition claims in England. Under that regime, collective proceedings can be brought before the Competition Appeal Tribunal (“ CAT ”) by a certified class representative. As a result of the Act, such actions can be on an “opt-out” basis i.e. the proceedings will automatically include the entirety of an affected class unless a member of the class actively opts-out.
  • Once initiated, collective proceedings can only proceed if the CAT grants a Collective Proceedings Order (“ CPO ”). The conditions for the CAT to grant a CPO are that the proposed representative can properly act for the proposed class in the proceedings (the “ Authorisation Condition ”) and that the claims are eligible for inclusion in collective proceedings (the “ Eligibility Condition ”).

Facts of the Case

  • In 2007, the European Commission held that Mastercard had breached EU competition law in setting default interbank fees (Multilateral Interchange Fees or “ MIFs ”) when consumers paid for goods or services using their Mastercard in the EEA. That decision was upheld by the General Court in 2012 and by the CJEU in 2014.
  • In September 2016, Mr Merricks (former Chief Ombudsman of the Financial Ombudsman Service) applied to commence opt-out proceedings against Mastercard on behalf of approximately 46m UK consumers, seeking an estimated £14 billion of compensation in respect of increased prices paid by UK consumers (who, he argued, had ultimately paid for the unlawful MIFs as a result of the higher prices being charged to all consumers who purchased goods or services from businesses which accepted Mastercard cards irrespective of whether purchases were made using a Mastercard credit or debit card).
  • In July 2017, the CAT dismissed Mr Merricks’ application for a CPO. Mr Merricks appealed against the CAT’s decision. Following judgments from both the Court of Appeal (in April 2019) and the Supreme Court (in December 2020), Mr Merricks’ application for a CPO was remitted back to the CAT.
  • Following the judgment of the Supreme Court, Mastercard did not challenge the application for a CPO but questioned whether Mr Merricks continued to meet the Authorisation Condition as a result of changes to his litigation funding arrangements since the CAT considered them in 2017.
  • As part of the Authorisation Condition, Mr Merricks was required to satisfy the CAT that:

(i) he had access to sufficient funds in respect of his own costs of the proceedings;

(ii) he was able to pay Mastercard’s costs were he ordered to do so; and

(iii) no conflict of interest could arise as a result of any constraints imposed on Mr Merricks by the litigation funding agreement.

  • Separately, Mastercard (i) challenged Mr Merricks’ application to amend the Claim Form to include those who had died before the claim was issued (which would increase the number of individuals in the class from approximately 46.2m to 59.8m); and (ii) challenged Mr Merricks’ claim for compound interest, which would significantly increase the quantum of his claim to £16 billion.

The Decision

  • The CAT granted the CPO sought by Mr Merricks, approving the first opt-out claim under the revised group actions regime in private competition claims to proceed.
  • As regards the Authorisation Condition and Mr Merricks’ litigation funding arrangements, the CAT held these to be sufficient given:

(i) Mr Merricks had access to sufficient funds to bring his claim under the litigation funding agreement, being £45m against an estimated budget of £32.5m;

(ii) Mr Merricks had sufficient cover (£15m) to meet any costs awarded to Mastercard in the event that Mr Merricks’ claim was unsuccessful. The funder agreed to provide an undertaking to the CAT that it would discharge any costs award; and

(iii) the funding agreement allowed Mr Merricks to make decisions as regards settlement free from conflict, and the funder also agreed to include a provision requiring it to take independent legal and expert advice before terminating the funding agreement.

  • In addition, the CAT held that Mr Merricks could not amend the Claim Form to include:

    • those who had died before the claim was issued, on the basis that the proposed amendment impermissibly sought to include deceased persons, rather than personal representatives of their estates and the application to amend the Claim Form had been brought after the relevant limitation period had expired; and
    • a claim for compound interest on the basis that there was no plausible or credible method for estimating that loss.

Analysis & practical advice

  • This is the first opt-out collective action to be approved by the CAT and a key milestone in collective actions in the UK. The decision will encourage litigation funders and claimant law firms and we expect to see a continued increase in CPO applications.
  • The CAT’s decision is the first of a number of CPO applications which have been on hold pending the outcome of the Supreme Court's decision. We expect future decisions will provide further guidance on what is required to obtain CPO certification in the coming months.
  • Both claimants and defendants will note the importance of adequate and appropriate litigation funding by the CAT as a condition to granting a CPO. Parties can expect similar levels of scrutiny to be applied to future determinations.
  • The CPO is a key procedural win for Mr Merricks’ claim and collective actions generally. However, the claim is still at an early stage and it will be interesting to see how it develops now that the CPO has been granted.
  • Proceedings in the CAT are limited to competition claims. Outside of the competition sphere, practitioners are waiting for the Supreme Court’s judgment in Lloyd v Google , as to whether similar opt-out group actions are available in the High Court in relation to alleged breaches of data protection laws.

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