Breakthrough for the UK “opt-out” class action as the Court of Appeal revives £14 billion claim against MasterCard

Published: 24/4/2019

Good news for those wishing to pursue “opt-out” class actions in the UK as the Court of Appeal sets aside the 2017 decision by the Competition Appeal Tribunal (CAT), which had refused to certify the action against MasterCard on the ground that the claims were ineligible, and gives the go ahead for the first claim under the UK’s “opt-out” regime to proceed.

The Claim

On 21 September 2016, Walter Merricks (a solicitor and former financial services ombudsman) applied for a collective proceedings order (CPO) pursuant to the new opt-out regime introduced by the Consumer Rights Act 2015. The CPO would allow him to act as the class representative and bring “opt-out” collective proceedings against MasterCard.

Opt-out proceedings differ from the more standard UK class action in that, unless they positively opt-out, anybody domiciled in the UK falling within the defined class is automatically included.

Merrick’s proposed class includes consumers who between 1992 and 2008 purchased goods and/or services from businesses that accepted MasterCard cards selling in the UK. The potential payout for the card firm is eye-watering – potentially as high as £14 billion. This is because, if successful, the class action could see up to 45 million consumers compensated with payouts worth up to £300.  

The claim itself is based on the EU Commission's finding that MasterCard’s EEA multilateral interchange fees (commonly known as MIFs) were excessive and in breach of Article 101(1) TFEU. MIFs are the fees a retailer pays to a consumer’s credit or debit card company when he or she uses a card.


In 2017, CAT refused Merricks' CPO application on the basis that that the claims were not eligible for inclusion in collective proceedings.

CAT was not persuaded there was “sufficient data available for this methodology to be applied on a sufficiently sound basis.” It also held Merricks had not put forward a reasonable and practicable means for estimating loss which could be used as the basis for distribution. CAT found that the proposed distribution method put forward would bear no relation to the individual losses suffered by the class members.

The Court of Appeal

On 16 April 2019, Patten, Coulson and Hamblen LJJ unanimously allowed Merricks’ appeal, meaning the CAT decision will now be set aside. The Court of Appeal was unpersuaded by the insufficient data point, concluding that CAT had prematurely carried out a sort of mini-trial, and Merricks, as the “proposed representative should not… be required to demonstrate more than that he has a real prospect of success.”

The Court of Appeal was also unpersuaded by CAT’s findings on distribution, concluding that it was premature to refuse the CPO on the grounds that the distribution methodology was unreasonable. The distribution does not have to be determined by or tied to individual loss.

What happens now?

The Court of Appeal refused MasterCard leave to appeal to the Supreme Court. It looks likely, however, that, if a settlement cannot be agreed, MasterCard will seek permission to appeal from the Supreme Court.

Watch this space

The decision is an important one which may cause market leaders with potentially dominant positions to tread more cautiously for fear of legal action.

The decision will also likely incentivise law firms and litigation funders involved in CPO actions to pursue, or revive, claims.

Market leaders, lawyers and funders should continue to follow the Merricks action closely. This is a new area of law and as it progresses the Merricks claim will continue to bring up further important issues relevant to opt-out collective actions.

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