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Mastercard faces down $18.5 billion UK Supreme Court interchange fees class action

The UK Supreme Court has ruled that it will allow a $18.5 billion (£14 billion) class action to proceed against Mastercard for allegedly overcharging on interchange fees to more than 46 million people in Britain over a 15-year period.

Mastercard faces £14 billion anti-competitive card fees claim

Mastercard faces down $18.5 billion UK Supreme Court interchange fees class action

The complex case, brought after Mastercard lost an appeal against a 2007 European Commission ruling that its fees were anti-competitive, could entitle adults in Britain to £300 pounds each if it is successful.

The court dismissed a Mastercard appeal, setting the scene for Britain’s first mass consumer claim brought under a new legal regime and establishing a standard for a string of other stalled class actions.

“Mastercard has been a sustained competition law breaker, imposing excessive card transaction charges over a prolonged period in a way it must have known would impose an invisible tax on UK consumers,” said Walter Merricks, a lawyer who is leading the action.

Mastercard says 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,” comments James Thorpe, vice president communications at Mastercard.

The Supreme Court ruling sends the case back to the Competition Appeal Tribunal (CAT), nominated in 2015 to oversees Britain’s fledgling, US-style “opt-out” collective class actions for breaches of UK or European Union competition law.

Mastercard said it would ask the CAT to “avert the serious risk of the new collective action regime going down the wrong path with a case which is fundamentally flawed”.

The CAT will now have to reconsider granting the necessary collective proceedings order (CPO) for the case to proceed to trial, having refusing to certify the case in 2017 because of its complexity. A hearing is expected next year.

The case centres on interchange fees which credit and debit card companies say they levy on merchants’ banks to cover the costs of card services, security and innovation.

Merricks, who is being advised by law firm Quinn Emanuel Urquhart & Sullivan, alleges these fees were excessive between 1992 and 2008, that they had to be paid by businesses that accepted Mastercard payments from British consumers and were passed on through increased shop prices.

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

Claims of this scale cannot be brought other than as class actions and they are of major concern to even the largest companies.

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

“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,” added Henderson.

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