Creditfix LB 03-2017
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Mastercard Class Action Lawsuit Blocked

A class action lawsuit worth an estimated ?14 billion being brought against Mastercard has been blocked by a British court.

The action was brought against the card giant for allegedly overcharging more than 45 million people in Britain over a 16-year period.

However, the Competition Appeal Tribunal (CAT) that oversees class actions in the UK has ruled that it would not grant the necessary collective proceedings order for the case to continue to trial.

The case was being brought against interchange fees which are charged by credit and debit card companies to retailers and merchants’ banks, alleging that the fees were a significant cost for retailers and were passed on through increased prices of goods and services to all UK consumers, including those who paid in cash and not just MasterCard holders.

Following a European Commission decision in 2007 that the fees were anti-competitive, Mastercard has finally lost a drawn-out appeal against the decision, leading to law firm Quinn Emanuel Urquhart & Sullivan launching the case on behalf of adults in Britain.

Before being stopped by CAT, the case had been due to be the largest in British legal history and test the new Consumer Rights Act introduced in 2015 which introduced ‘opt out’ collective class actions for breach of UK or EU competition law.

Under the new ‘opt out’ regime UK based members of a defined group are automatically bound into legal action unless they opt out, allowing huge class actions to be brought.

One of the concerns cited by the Competition Appeal Tribunal was the difficulties in providing evidence that MasterCard fees were passed on to consumers and in precisely calculating individual losses for so many consumers.

However, lawyer Walter Merricks, who is the representative named on the proposed action, feels that these difficulties could be overcome, and is considering an appeal with his advisers.

He said: ‘The new collective action regime was introduced by the Consumer Rights Act to overcome the difficulty for consumers seeking to recover losses from competition law infringements. I am concerned that this new regime, designed to benefit consumers, may never get off the ground.’

Mastercard understandably welcomed the judgment, stating that they felt the claim was ‘completely unsuitable’ to be brought under the collective action regime.

A similar dispute with retailers heard at the high court in January found Mastercard to have charged interchange fees at a lawful level and without restricting competition.

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