Mastercard is facing a claim of up to £14 billion in a landmark UK collective action case over interchange fee charges that were passed on to shoppers.
This week, a pivotal Supreme Court hearing that will decide whether a claim on behalf of 46 million people is able to proceed to the next stage of legal action.
What is the Merricks vs Mastercard claim
In 2016, former financial ombudsman Walter Merricks CBE launched a class action on behalf of 46 million customers against Mastercard. It related to the European Commission’s 2007 finding that the card network charged inflated interchange fees to consumer card transactions between 1992 and 2008.
It’s estimated by Mr Merricks that as many as 46 million consumers collectively lost out as much as £14 billion as a result of the interchange fees charged by Mastercard. This means if his argument during the collective action is accepted, claimants in the UK could be entitled to around £300 in compensation.
However, the ‘overblown’ class action against Mastercard should not be allowed to go ahead, argue Mastercrd, as the claims are not suitable for collective proceedings, the Supreme Court heard.
Mark Hoskins QC, for Mastercard, said the individual claims should not be brought in collective proceedings because they are not suitable for an aggregate award of damages. Hoskins stressed the enormous scope of the claim and the difficulties in calculating the loss different consumers allegedly suffered.
‘In 1992, the start of the claim period, half a million retailers in the UK accepted payment by Mastercard cards. That had risen to some 800,000 merchants by end of claim period in 2008. In their oral evidence the experts accepted that there was likely to be significant variation in the extent merchants in different sectors of the economy…passed on any overcharge to their customers by way of higher retail prices,’ Hoskins said.
He added that within each sector of the economy there is a wide variety of businesses and they in turn might have had significantly different rates of ‘downstream pass-on’. Pass-on rates might also have varied geographically across the UK and fluctuated over the 16 year period, he said.
Asked whether the claim could go ahead on a more limited basis, Hoskins replied: ‘This hasn’t been suggested by Mr Merricks…What the actual application would require is the tribunal to conduct a full trial across all the sectors of the UK economy…If a narrower claim had been brought it might have gone through.’
Mastercard is challenging the Court of Appeal’s decision to remit Merricks’ application for a collective proceedings order (CPO) to the Competition Appeal Tribunal. The latter refused the CPO application in 2017.
Hoskins said: ‘The tribunal is perfectly entitled to say this claim is so overblown we are not going to allow it to go through; it would not be a proper use of judicial time and it would not be fair on Mastercard.’
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