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MasterCard faces a multi-billion pound class action over anti-competitive card charges

MasterCard is set to face a £19 billion class action regarding anti-competitive credit and debit card fees. The claim is predicted to be one of the highest value consumer claims in UK legal history, and only the second UK class action to date.

The claim is being brought using the new collective proceedings procedure introduced by the Consumer Rights Act 2015 (CRA). This enables a claim to be brought in the Competition Appeal Tribunal (CAT) by a suitable representative, on behalf of a class of affected persons. The representative for the claim is Walter Merricks, the former Chief Financial Ombudsman.
 
Merricks alleges that MasterCard's credit and debit card charges from 1992 to 2008, paid by retailers when customers made purchases using a MasterCard card, were passed on to all consumers through increased prices for goods and services.
 
Any UK consumer could be a potential claimant, even cash purchasers. The claimants will seek permission to proceed on an 'opt-out' basis. If successful, this means that all consumers will be part of the group of claimants, unless they opt out. No action will be required by individuals, who will automatically be eligible to receive compensation. This is a new feature introduced by the CRA, and it is rumoured could lead to around £400 in damages for every single consumer if the action is successful.

The claim follows a European Commission (the Commission) decision in 2008, which held that MasterCard's charges for cross-border card payments (known as multilateral interchange fees) were anti-competitive. The Commission ordered MasterCard to cut the level of its fees. Following numerous lengthy appeals, the European Court of Justice confirmed the decision in 2014.
 
As the Commission has already determined that MasterCard infringed competition law, the CAT will only be required to establish whether MasterCard has caused loss to the claimants and if so, to determine the level of damages.

The claimants will need to obtain permission from the CAT in order to pursue the claim, which is expected to be heard in September.  If successful, a full hearing could take place in 2018. The claim is expected to be filed imminently. 

The claim proceeds at the same time as claims brought by numerous retailers also seeking to recover very substantial damages for the charges.
 
Although class actions are a very new feature of UK law, consumers are already utilising the regime to initiate claims. The precise nature of the legal arguments to be addressed by the claim remain to be seen but, if the claim succeeds, other financial institutions could be at risk of similar actions.
 
The TLT team regularly deals with financial services disputes. Please contact Neil Franklin if you would like to discuss further.

This publication is intended for general guidance and represents our understanding of the relevant law and practice as at July 2016. Specific advice should be sought for specific cases. For more information see our terms & conditions 

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