Merricks v Mastercard: Competition Appeal Tribunal confirms first Collective Proceedings Order

In a unanimous judgment in Walter Hugh Merricks CBE v Mastercard Incorporated and Others,[1] the Competition Appeal Tribunal (“CAT”) has, for the first time since the UK’s collective action regime was introduced in October 2015, granted a Collective Proceedings Order (“CPO”). It has authorised Walter Merricks CBE (“Merricks”) as the class representative for opt-out collective proceedings for damages against Mastercard on behalf of an estimated 46.2 million individuals. 

The CAT’s decision to grant the CPO had been expected after the Supreme Court’s landmark judgment in December 2020 (see our analysis here) and Mastercard’s subsequent decision not to oppose the CPO outright. The CAT did, however, side with Mastercard to hold that Merricks could not claim compound interest or include in the class persons who had died before the claim form was issued. The CAT also considered Merricks’ funding arrangements and submissions from an objector about Merricks’ suitability to act as class representative. 

We consider the CAT’s judgment in more detail below. 


The CAT’s judgment in Merricks follows a CPO application hearing which took place in March 2021, the latest stage in five years of proceedings which commenced in 2016.

The claim concerns Mastercard’s default multilateral interchange fees (“MIFs”), i.e. fees charged by a cardholder’s bank to a merchant’s bank when a consumer pays for goods or services using a Mastercard payment card. 

On 19 December 2007, the European Commission issued a decision (upheld on appeal by the European Courts) which found that Mastercard’s EEA MIFs[2] restricted competition in breach of EU competition law. The Commission also found that the levels of the EEA MIFs had a direct effect on the amount of the charges paid by merchants, and considered that some part of the MIFs was likely to have been passed on by merchants to consumers in the form of increased prices. 

In September 2016, Merricks, acting as class representative, issued follow-on proceedings against Mastercard on behalf of individuals who purchased goods or services between May 1992 and June 2008 from businesses in the UK which accepted Mastercard payments, and were aged 16 or over. Merricks alleges that the unlawful MIF was passed on to consumers entirely (or near entirely) and that, absent Mastercard’s infringement, all consumers would have paid lower prices during the claim period. Merricks sought an aggregate award of damages for this overcharge, together with interest, totalling more than £14 billion – the largest civil damages claim of any sort ever brought in the UK.

In its original judgment in 2017, the CAT refused Merricks’ CPO application, finding that, of the two conditions for a CPO under s.47B of the Competition Act 1998 (“CA98”), it was satisfied that Merricks could be authorised to bring the claim but not that the claims were eligible to progress as collective proceedings. The Court of Appeal (“CoA”) sided with Merricks, holding that the CAT had failed properly to apply the eligibility condition, as well as criticising the approach the Tribunal had taken to the certification hearing. In December 2020, the Supreme Court (“SC”) dismissed an appeal by Mastercard, while rejecting certain criticisms made by the CoA of the CAT’s approach in the first certification hearing. The case was remitted to the CAT for the CPO application to be determined in accordance with the appellate judgments.

CAT’s CPO Judgment

In light of the SC’s judgment, Mastercard did not oppose certification, but there remained outstanding disputes about: (i) whether Merricks could amend the claim form to extend the class to include persons who died before the claim form was issued; and (ii) whether Merricks’ claim for compound interest could be brought in collective proceedings. The CAT also considered two developments since it had originally heard Merricks’ CPO application in 2017, one relating to the funding of the claim and one relating to Merricks’ suitability to act as the class representative.

Merricks could not amend the claim form to include deceased persons

The original claim form issued by Merricks excluded deceased persons from the class. Merricks sought to amend the claim form to include deceased persons in the definition of the class, which would increase the estimated class size from ca. 46.2 million to ca. 59.8 million. This application was rejected by the CAT on the basis that: 

  1. a claim by an individual for loss caused by Mastercard’s infringement of competition will, on their death, vest in their estate;
  2. a claim for damages could not be brought in the name of a deceased person under s. 47B CA98;
  3. instead, a claim could be made on behalf of the estates of deceased persons by being made in the name of their personal representatives but that was not the form of amended class definition sought by Merricks;
  4. Merricks seeks to bring opt-out proceedings, which are brought on behalf of “represented persons”, which means inter alia class members “domiciled in the UK” who have not opted out. Domicile requires being a “resident in the UK”. The CAT found Merricks’ submission that a person can be “relatively resident” in the UK long after their death to be “an imaginative concept for which no support was cited in any authority”; and
  5. even if it were possible to have claims by deceased persons included in collective proceedings, the application to amend the claim form was made after the limitation period had expired and an amendment to the class definition to add persons who were deceased before the claim was issued could not be allowed. The Tribunal also made clear that this is distinct from the issue of persons who were alive when the claim form was issued but have subsequently died or should die in the course of the proceedings – the judgment is not concerned with whether the class representative could apply to amend the claim form and/or any CPO to have those persons substituted by the representatives of their estates.

Merricks’ claim for compound interest was unsuitable for collective proceedings

Merricks claimed that, absent Mastercard’s MIFs, class members would have had more funds available to pay off debts or contribute to their savings and thus should be entitled to compound interest. The CAT held that it is not sufficient for a claim for compound interest merely to show that an individual had borrowings and/or savings. Instead, it is necessary to show, on the balance of probabilities, how individuals funded the additional expense (where borrowing) or what they would have done with the additional money (where saving), had there been no overcharge. Individuals may have been able to pay the additional money out of their earnings and/or might simply have used the additional money (if there had been no overcharge) to spend more money and not to reduce borrowings or add to a savings account. 

The CAT determined that Merricks had not proposed a “credible or plausible method” for estimating on an aggregate basis the extent of the overcharge that would have been saved or used to reduce borrowings rather than spent, which is the essential basis for a claim to compound interest as a distinct head of loss. In the absence of such a method, the CAT found this head of claim to be unsuitable for an aggregate award in these collective proceedings. 

As a result, the class members are entitled to seek simple interest only, reducing the claim value (as at January 2021, although the CAT recognised this needed to be adjusted to remove claim value attributable to persons who had died before the claim form was issued) from an estimated ca. £16 billion with compound interest to ca. £13.8 billion with simple interest. 

In light of the above conclusion, it was unnecessary for the CAT to consider whether recovery of compound interest was a “common issue” raised by the claims of all class members, but observed obiter that, if only a minority of class members suffered loss by way of compound interest, it would be difficult to find this a common issue across the class.

Merricks authorised as class representative subject to funding commitments

The CAT had held in 2017 that Merricks satisfied the authorisation condition. However, the CAT considered a couple of developments since that decision in its recent judgment. 

First, the CAT considered the contention of one member of the proposed class that it was not just and reasonable for Merricks to act as a class representative. The objection arose out of a historical complaint related to a property transaction involving the class member that was handled by Merricks in his roles as the inaugural Chief Financial Services Ombudsman and as an independent reviewer of Royal Institution of Chartered Surveyors regulation. The CAT made short shrift of these submissions, holding there to be no grounds to suggest Merricks had any conflict of interest with proposed members of the class.

Secondly, Merricks had replaced his third party litigation funder for the collective action. Despite only limited objections from Mastercard to the terms of Merricks’ new litigation funding agreement (“LFA”), the CAT, in order to discharge its duty to protect the best interests of the proposed class members, probed whether the new LFA would create a conflict of interest with the proposed class members or otherwise prejudice Merricks’ ability to act fairly in the best interests of the class. Having “scrutinised” the terms of the LFA, the CAT considered that:

  1. Merricks’ right to act in the best interests of the class is sufficiently protected by a clause granting him ultimate, sole discretion in any disagreement between him and the funder on settling the claims;
  2. Merricks will, through the litigation funder, have sufficient coverage to pay Mastercard’s recoverable costs if ordered to do so; and
  3. Merricks’ authorisation as class representative is conditional upon the litigation funder undertaking to the Tribunal that it would discharge its liability for costs ordered against Merricks to protect Mastercard, given Mastercard cannot enforce the LFA against the funder (which is based outside the jurisdiction). The terms of the undertaking are to be agreed between the parties, failing which they are to be resolved through written submissions in due course.

A momentous judgment?

Both sides will claim victories from the CAT’s judgment. Merricks has succeeded in obtaining certification of the claims which will (subject to any appeals and the necessary procedural steps to form the class) now progress to substantive proceedings. The CAT will hear further submissions in the coming months on the dates for proposed class members’ domicile and opt-in and opt-out notifications to be set out in the CPO, as well as how the CPO should be publicised to proposed class members. Mastercard has prevented the expansion of the class to include deceased persons, estimated to have avoided an increase in class size of ca. 13.6 million. It has also succeeded in excluding compound interest on any loss suffered from the claims, reducing the claim value by around 14%.

The CAT’s decision to grant the CPO was a foregone conclusion, given the SC’s judgment and the lack of opposition from Mastercard. In that sense, while the judgment is a major milestone in the development of the UK’s collective actions regime, it does not shed much light on how CPO applications will be determined in the wake of the SC’s December 2020 judgment. 

The CAT’s treatment of the contested issues does, however, suggest that, despite the SC’s lower bar for certification, the CAT will continue to scrutinise all issues in CPO applications as part of the certification process. For example, the CAT’s rejection of the claim for compound interest on the basis of a lack of “credible or plausible method” for estimating the extent of the overcharge that would have been saved or used to reduce borrowings is noteworthy in light of the SC’s decision that there is a very limited role for the application of a merits test at the certification stage. Its scrutiny of the LFA also suggests that the CAT will hold to account funders looking to make large returns on collective actions, subordinating their role to ensure there is no conflict of interest for the class representative, and requiring assurances (through undertakings to the CAT if necessary) that defendants will be protected in respect of costs.

Judgments in respect of a number of CPO applications that had been stayed pending the SC’s judgment are expected to be handed down in the next few months, and will likely provide greater clarity on the application of the SC’s guidance. In particular, we eagerly await the CAT’s decision in the FX claims, which will provide guidance for the determination of ‘carriage disputes’ in collective proceedings. Decisions are also awaited in respect of the first applications for CPOs based on ‘standalone’ claims (the Railcard proceedings), and separate applications for opt-out and opt-in claims in the Trucks proceedings.

Click here for the judgment: Walter Hugh Merricks CBE v Mastercard Incorporated and Others [2021] CAT 28


[1]    [2021] CAT 28. 

[2]    The EEA MIF applies when a card issued under the Mastercard scheme in one EEA Member State is used to purchase goods or services in another EEA Member State.