The Competition Appeal Tribunal has approved a £200m settlement between Mastercard and class representative Walter Merricks CBE.
The collective action, led by Merricks, followed the European Commission’s 2007 ruling that Mastercard’s multilateral interchange fees – charged between 1992 and 2007 – breached Article 101 of the EU Treaty, which prohibits the direct or indirect fixing of prices or trading conditions.
“I am very pleased that after more than eight years, where I have given my all to get the best result possible for UK consumers, that the tribunal has today confirmed that the settlement I agreed with Mastercard is just and reasonable – in fact, the tribunal went as far as to say it had no doubt about that,” Merricks said.
“I had clearly hoped to have recovered more, but the case and facts developed in a way which meant I could recover less than I initially planned, but I recovered the best amount possible. I now look forward to distributing the settlement to get it in the hands of UK consumers.”
Representing around 44 million individuals, Merricks initially sought more than £14bn in damages. While Judge Hodge Malek KC described the outcome as “disappointing”, he commended Merricks for his efforts over the past eight years.
Boris Bronfentrinker, partner at Willkie Farr & Gallagher who represented Merricks, also acknowledged the determination shown throughout the case.
“There have been over 30 rulings, multiple trips to the Court of Appeal and also to the Supreme Court. Mr Merricks has had to adapt as the case and the facts evolved, but he secured the best possible outcome, which the tribunal today said it had no doubt was the case,” Bronfentrinker added.
“These proceedings started off as a landmark case in setting the foundation for collective actions in the UK and it will end as equally groundbreaking in a settlement achieved under heavy attack and challenge by the litigation funder.”
The litigation funder, Innsworth Capital, contested the settlement, arguing it was premature and too low. However, the tribunal dismissed the challenge, stating that Innsworth “has not got a bad return.”
Bronfentrinker, concluded: “It is most unfortunate that Innsworth chose to fight the settlement and to also threaten Mr Merricks personally by starting litigation against him. Its efforts have today failed and hopefully they accept that and move on.”
Reacting to the case, a Mastercard spokesperson said: “We welcome the tribunal’s decision. We will continue to focus on providing consumers and businesses with what they expect from Mastercard – a great payments experience, strong value and peace of mind.”
One of many cases for Mastercard and Visa
Last month, Commercial law firm Harcus Parker called on larger UK companies to join its class action lawsuit against Mastercard and Visa. The firm claimed that businesses are being overcharged on interchange fees when customers pay via commercial cards.
The lawsuit, approved by the Competition Appeal Tribunal last August, asserted that such charges have led to UK businesses losing an estimated $4bn.
Lawsuits aren’t the only headache for the two payments giants at the moment. UK regulators have recently started to ramp up efforts to challenge the duopoly that the two entities hold over the payments sector.
This is being done by promoting alternative payment methods, which have become popular in emerging markets in South America, Asia and Africa. However, in more traditional markets, such as the US and the UK, consumers still prefer to use card-based payments.
