Friday 11 December 2020 10:13 am

Mastercard loses £14bn class action ruling in UK Supreme Court for overcharging 46m Brits

A £14bn class action against Mastercard for allegedly overcharging more than 46m people in Britain over a 15-year period has been given the go-ahead by the UK Supreme Court this morning.

The ruling means the case will now head for a second hearing at the Competition Appeal Tribunal so a decision can be made on a so-called Collective Proceedings Order.

The judgment, which upholds last year’s Court of Appeal decision, sets the scene for Britain’s first mass consumer claim brought under a new legal regime and offers guidance for a string of other class actions that have been stalled in its wake. Almost every adult in the UK could receive a payout of up to £300 from Mastercard.

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Mastercard response

Minutes after the decision, James Thorpe, vice president communications at Mastercard in London, told City A.M. that the company “fundamentally disagrees” with this claim.

“No UK consumers have asked for this claim. It is being driven by ‘hit and hope’ US lawyers, backed by organisations primarily focused on making money for themselves,” Thorpe said.

Mastercard will be asking the Competition Appeal Tribunal to avert the serious risk of the new collective action regime going down the wrong path with a case which is fundamentally flawed,” he added.

Former Ombudsman Merricks

The legal action was initiated by former ombudsman Walter Merricks after claims emerged that 46m consumers across Britain had paid higher prices in shops over a period of 16 years due to excessive transaction fees charged by Mastercard.

“I am very pleased with today’s decision,” Merricks reportedly said. “It is nearly 12 years since Mastercard was clearly told that they had broken the law by imposing excessive card transaction charges, damaging consumers over a prolonged period.”

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“When challenged, all they have done is to raise technical legal arguments that turn out to have no merit – as the court of appeal has shown today. It’s now time for Mastercard to admit the damage they did, to apologise to the British public, and to agree to pay the compensation they owe,” Merricks added.

He stressed that the maximum payout would be about £300 for anyone who can demonstrate that they were present in Britain between 1992 and 2008.

Legal responses

“This case has a shock factor,” said Kenny Henderson, a litigation partner at law firm CMS. “It is frankly a huge decision, encompassing 46.2m people and seeking a sum in the region of £14bn.”

Claims of this scale cannot be brought other than as class actions and they are of major concern to even the largest companies, Henderson told City A.M.

The Competition Appeal Tribunal will now have to re-consider whether this claim should be certified as a class action, he explained.

“But the bigger concern for business more generally is that the Supreme Court ruling will encourage claimant law firms to file more class actions against other large companies. We could see many more large claims being filed – and a shift towards the class action culture that we associate with the US,” Henderson added.

Meanwhile, Mark Sansom, lead partner on the case from Freshfields, told City A.M. the Supreme Court dismissed the appeal rather than carry out a re-hearing in these very unusual circumstances. 

“However, it is important to note that there was a 2-2 split between the judges on a number of the key issues, with two of the judges accepting that the Competition Appeal Tribunal had been entitled to reject the proposed claim rather than certify it to proceed,” Sansom said, adding that the Tribunal will now engage with the implications of that at a future hearing.

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Also commenting on the decision this morning, Richard Raban-Williams, a solicitor at Seddons, said that although Mastercard denies the validity of any such action, it is likely to now face collective proceedings in the Competition Appeal Tribunal.

“Legal professionals will await any such proceedings with interest, as they would represent the first mass claim of this nature in Britain,” Raban-Williams told City A.M.

“The general public is also likely to be interested – if Mastercard is found liable then every adult in the UK, regardless of whether they had a Mastercard during the relevant period, is in line to potentially recover in the region of £300 each,” he concluded.

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