Press and News

£300 windfall from Mastercard after 'landmark' court ruling

by George Nixon for and Jessica Green for mailonline

Almost every adult in Britain could receive a £300 windfall from Mastercard after 'landmark' court ruling paves the way for a £14billion damages claim

Nearly every adult in the UK could be in line for a payout from Mastercard after a £14billion damages claim against the payment provider was revived by the Court of Appeal today.

The legal action is being brought against the card giant by Former financial ombudsman Walter Merricks.

He said the maximum payout from the proposed 'opt-out' claim will be around £300 for anyone over the age of 16 and who was a resident in the UK for three months or more between 1992 and 2008.

Around 46.2million people could qualify for the payout - including those who have never had a Mastercard, according to Merricks.

He alleges that the firm's breaches of competition law, formed by the European Commission in 2007, have led to all UK consumers paying higher prices on purchases from businesses that accepted Mastercard.

The £14billion Mastercard claim

What is the claim against Mastercard?

Former financial ombudsman Walter Merricks is claiming that Mastercard’s actions cost UK shoppers billions of pounds through its use of fees.

Who would be eligible for a payout?

If the claim is successful, as many as 46.2million people, who were adults and UK residents for three months or more between 1992 and 2008, could qualify for the payout.

This is dependent on a successful case being brought, however.

Mastercard said it will fight the case all the way to the supreme court, if necessary, and disagrees 'fundamentally' with the basis of the claim. If judges rule in favour of Mastercard in any potential case, there will be no payout.

How is the case being brought?

A major reform of collective action procedures took place in 2015 when an 'opt-out' collective redress procedure for competition law claims in the Competition Appeal Tribunal (CAT) was introduced, making Mr Merricks’ claim a possibility, despite its enormity.

When would a potential payout happen?

The class action was originally refused in July 2017, but a tribunal ruled that the claim could be brought, opening the door for the case on April 16 2019.

The case has not yet been brought - only the possibility of it being brought has been revived - so any potential payout in the event of a successful action would occur after a likely lengthy legal battle, months or possibly years in the future.

Why is the class action being brought?

The European Commission ruled in 2007 that Mastercard breached competition law through its setting of certain fees.

Walter Merricks argues that the firm's breaches led to all UK consumers having to pay higher prices from businesses that accepted Mastercard - even if the customer was not using Mastercard.

How much could be paid out in the event of a successful claim?

Walter Merricks said the maximum payout from the proposed 'opt-out' claim could be as much as £300 for anyone over the age of 16 and who was a resident in the UK for three months or more between 1992 and 2008.

His claim seeks damages and interest totalling £14.098billion, and is one of the first mass consumer claims brought in the UK after class action was introduced in 2015.

Mr Merricks' proposed class action was thrown out in July 2017 by a specialist tribunal, which ruled the claim was 'not suitable to be brought in collective proceedings'.

But senior judges in London today found the Competition Appeal Tribunal had applied the wrong legal test in deciding whether to give the claim the go-ahead.

It means the tribunal will now have to reconsider what has turned into the biggest class action in British legal history.

The proposed claim follows the European Commission's 2007 decision that Mastercard had breached competition law in relation to the setting of certain fees charged between banks over Mastercard transactions.

Lord Justice Patten, sitting with Lord Justice Hamblen and Lord Justice Coulson, said the CAT 'demanded too much' information about how the fees Mastercard charged on transactions were said to have been 'passed on' to consumers.

The judge also ruled the tribunal misdirected itself in relation to how any damages which might ultimately be awarded were to be divided among the claimants.

In a statement after the ruling, Mr Merricks said: 'I am very pleased with today's decision.

'It is nearly 12 years since Mastercard was clearly told that they had broken the law by imposing excessive card transaction charges, damaging consumers over a prolonged period.

'As a result we all had to pay higher prices in the shops than we should have done – while Mastercard have pocketed the profits.

'It's now time for Mastercard to admit the damage they did, to apologise to the British public, and to agree to pay the compensation they owe.'

Mr Merricks' solicitor Boris Bronfentrinker, from Quinn Emanuel Urquhart & Sullivan, said: 'Today is truly a landmark day for all UK consumers that Mr Merricks seeks to represent in a claim to recover the billions in damages caused to them by Mastercard's unlawful anti-competitive conduct.'

A Mastercard spokeswoman said the company was seeking permission to appeal against the ruling to the Supreme Court.

She said in a statement: 'This decision is not a final ruling and the proposed claim is not approved to move forward, rather the court has simply said a rehearing on certain issues should happen.

'Mastercard continues to disagree fundamentally with the basis of the claim and we believe UK consumers receive real value from the security, convenience and consumer protection of our payment services.'