Last month, the UK’s Competition Appeal Tribunal (“CAT”) announced its long-awaited class certification judgment in Merricks v. MasterCard – the largest damages claim in UK history and the second case brought under the new collective proceedings system. Under the UK Consumer Rights Act 2015, private plaintiffs may bring collective proceedings similar to class actions available in the U.S., Canada and other countries. The CAT’s analysis and observations may deter some actions and encourage others as a major step in developing case law to guide courts and litigants in the future.
Procedural Background
The Merricks case arose from an EU Commission action against MasterCard, which determined that MasterCard had imposed supra-competitive multilateral interchange fees on retailers for cross-border transactions. A number of private damages lawsuits brought by retailers followed, and MasterCard has paid these retailers hundreds of millions of dollars in damages and settlements. (For example, the decision in Sainsbury’s Supermarkets Ltd. v. MasterCard, Inc. [2016] CAT 11, which awarded Sainsbury £68.6 million, plus interest.)
In this case, Walter Merricks filed a collective proceeding order (CPO) application as the proposed class representative. The CPO application sought damages of £14 billion on behalf of all UK residents who used a MasterCard credit or debit care between May 22, 1992 and June 21, 2008—a class composed of 46.2 million people.
Mr. Merricks proposed to quantify damages by calculating the volume of commerce affected, the overcharge percentage imposed by MasterCard, and the rate at which merchants passed through the overcharge to consumers. At the CPO application hearing, the CAT expressed concerns with the proposed methodology, particularly the extent to which the pass-through rate would vary across different sectors of the economy and different class members. Determining pass-through rates is a difficult problem in U.S. indirect purchaser antitrust class actions and an issue that did not impede Sainsbury’s and other merchants from recovering damages from MasterCard. (See The American Invasion – Class Actions Are Coming To the UK).
The Merricks case arose from an EU Commission action against MasterCard, which determined that MasterCard had imposed supra-competitive multilateral interchange fees on retailers for cross-border transactions. A number of private damages lawsuits brought by retailers followed, and MasterCard has paid these retailers hundreds of millions of dollars in damages and settlements. (For example, the decision in Sainsbury’s Supermarkets Ltd. v. MasterCard, Inc. [2016] CAT 11, which awarded Sainsbury £68.6 million, plus interest.)
In this case, Walter Merricks filed a collective proceeding order (CPO) application as the proposed class representative. The CPO application sought damages of £14 billion on behalf of all UK residents who used a MasterCard credit or debit care between May 22, 1992 and June 21, 2008—a class composed of 46.2 million people.
Mr. Merricks proposed to quantify damages by calculating the volume of commerce affected, the overcharge percentage imposed by MasterCard, and the rate at which merchants passed through the overcharge to consumers. At the CPO application hearing, the CAT expressed concerns with the proposed methodology, particularly the extent to which the pass-through rate would vary across different sectors of the economy and different class members. Determining pass-through rates is a difficult problem in U.S. indirect purchaser antitrust class actions and an issue that did not impede Sainsbury’s and other merchants from recovering damages from MasterCard. (See The American Invasion – Class Actions Are Coming To the UK).