Mastercard £14 billion card fees case rejected

A landmark class action case that could have meant 46 million Brits received compensation has been blocked by a tribunal.

The Competition Appeal Tribunal has rejected a class action claim against Mastercard that would have seen millions of Brits pocket hundreds of pounds of compensation – even if they weren’t cardholders. 

The £14 billion lawsuit was filed against Mastercard over hefty card fees that were allegedly passed on to UK shoppers between 1992 and 2008.

Walter Merricks, a former Chief Financial Ombudsman, instructed US law firm Quinn Emanuel to help bring the case under new class action rules introduced in the Consumer Rights Act 2015.

The new powers allow a collective damages claim to be brought on behalf of a class of people who’ve suffered loss.

The case would have meant all UK shoppers over the age of 16 would have automatically become part of the group unless they chose to opt out.

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The claim

Merricks claims Mastercard charged exorbitant interchange fees – costs imposed on retailers for processing credit and debit card payments – over a 16-year period between 1992 and 2008.

This is something that has already been established by European Courts, but Merricks says costs incurred by merchants were passed on to shoppers, regardless of whether they were Mastercard users, in the form of higher prices, for which they deserve compensation.

“The prices of everything we all bought from 1992 to 2008 were higher than they should have been as a result of the unlawful conduct of Mastercard,” he said back in July last year.

Merricks believes the matter to decide was how much Mastercard’s actions cost British shoppers and how much they should be compensated.

In a statement in September he said: “Mastercard charged billions of pounds of unlawfully high fees for its sole benefit and to the detriment of consumers.

"It has already been found to have broken competition law, the basis of which was to protect consumers, and that cannot be disputed. There is no basis upon which Mastercard can contend that its card fees were not unlawful.”

Merricks and his team estimated the total damage to UK shoppers could be as much as £14 billion and 46 million Brits could have been impacted by the higher prices. This would have meant compensation of £304 each.

Why was the case rejected?

The Competition Appeal Tribunal felt Merricks and his team would not be able to provide evidence that fees were passed onto shoppers in the form of higher prices.

It stated: “What is very much in issue is the degree to which (if at all) merchants passed through this increase in the Merchant Service Charge (MSC) in their retail prices charged to customers. In the period covered by the present proceedings, only a small number of merchants charged a differential price for transactions paid for by credit card as opposed to cash, cheque or debit card.”

The judge also felt that there wasn’t a good enough method to calculate individual loss to each of the 46 million in the class that should be compensated.

Can the verdict be appealed?

Merricks said he was disappointed with the verdict and has vowed to appeal it.

In a statement, he said: "I am surprised and disappointed that the Competition Appeal Tribunal has rejected my application to bring collective proceedings against Mastercard.

"I am concerned that this new regime, designed to benefit consumers, may never get off the ground. The granting of the collective proceedings order in this case would have allowed 46 million consumers to recover the losses caused to them by Mastercard’s proven illegal conduct.

"It is, however, unfortunate that the Tribunal considered that it was not satisfied that my experts would be able to get the evidence to show that the illegal fees charged by Mastercard to businesses were then passed on to consumers in the form of higher prices.

"I believe these are matters my advisers could have addressed and overcome had the claim been allowed to proceed. I am actively considering with my advisors and litigation funders the possibility of an appeal."

Mastercard’s response

A Mastercard spokesperson said: "We welcome the Competition Appeal Tribunal’s judgment refusing certification for the proposed collective action.

“As set out in Mastercard’s arguments to date, we believe that the claims were completely unsuitable to be brought under the collective actions regime. The Tribunal sided with this position. 

"We firmly believe that consumers derive real value from our network through the benefits of security, convenience and consumer protection, and we remain committed to investing in our services in order to continue to meet the rapidly evolving needs of all our customers."

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This article has been updated

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