Mastercard Incorporated and others v Walter Hugh Merricks CBE

The Supreme Court considered the legal framework governing certification of collective proceedings under the Competition Act 1998 (as amended), in particular the requirements of section 47B and the Tribunal rules (rule 79). The central issues were whether the Competition Appeal Tribunal (CAT) had erred in refusing a Collective Proceedings Order (CPO) on grounds that (a) the claims were not suitable for an aggregate award of damages and (b) the proposed distribution method offended the compensatory principle. The Court held that the CAT had made a number of legal errors: it wrongly treated suitability for an aggregate award as a separate hurdle rather than one of many matters to be weighed under rule 79(2); it applied an inappropriately high merits threshold when assessing the likely availability of data for class-wide quantification; and it was wrong to treat a lack of correspondence with individual compensatory outcomes as an absolute bar to certification. The Court emphasised the statutory scheme permits aggregate awards without individual assessment (section 47C) and that the CAT must apply the ordinary civil principle that the tribunal should do the best it can with the available evidence when quantifying loss.

The appellant Mastercard appealed against a refusal by the Competition Appeal Tribunal to make a Collective Proceedings Order in a proposed large opt-out collective claim brought by Mr Walter Merricks, representing about 46.2 million UK consumers for alleged overcharges flowing from Mastercard’s interchange fees during the period May 1992 to December 2007. The claim was a follow-on claim based on the Commission decision finding an infringement of competition law in relation to the Intra-EEA multilateral interchange fee. Mr Merricks sought an aggregate award of damages to be distributed on a per-capita per annum basis.

The CAT refused certification on two principal grounds: (i) that the claims were not suitable for an aggregate award of damages because the applicant’s experts had not shown a sufficient likelihood that data would be available to apply their weighted-average pass-on methodology across all relevant market sectors and years; and (ii) that the proposed distribution method failed to respect the compensatory principle because it did not provide a practicable means of compensating individuals in proportion to their likely individual losses. The Court of Appeal overturned the CAT on multiple legal points and remitted the application.

The Supreme Court (majority) reviewed the statutory provisions (section 47A, 47B and 47C of the Competition Act 1998 and the CAT Rules) and relevant jurisprudence (notably Canadian authority such as Pro‑Sys). The Court held:

• Nature of the certification task: certification is not a merits-only test; it is a multi-factorial suitability judgment under rule 79(2) to be exercised by the CAT, taking into account "all matters it thinks fit" including whether collective proceedings are an appropriate and proportionate means to resolve common issues.
• Aggregate damages and distribution: section 47C permits aggregate awards without individual assessments and the CAT should not treat the compensatory principle as an absolute bar to aggregate distribution methods; distribution need only be just and reasonable. It is permissible in some cases to adopt rough or proportionate distribution mechanisms when individual assessment is impracticable.
• Evidence threshold: the CAT must apply a proportionate, relatively low threshold when assessing whether there is a sufficient evidential basis for the proposed class-wide quantification methodology; it should not impose an excessive merits threshold or effectively conduct a mini-trial at certification. At the same time the CAT is entitled to require some realistic factual basis that the methodology can be practicably applied to the class at proportionate cost.

The Court concluded the CAT had erred in law in several respects (including mischaracterising the common issues, elevating suitability for aggregate damages to a separate hurdle, and treating the compensatory principle as mandatory for distribution) and dismissed Mastercard’s appeal, remitting the CPO application to the CAT for rehearing in accordance with the correct legal approach.

Appeal dismissed. The CAT’s refusal of a Collective Proceedings Order was vitiated by errors of law: it misapplied the statutory suitability test in rule 79(2) by treating suitability for aggregate damages as a separate hurdle and applied an unduly exacting merits threshold as to the availability of data; it was also wrong to treat respect for the common law compensatory principle as an absolute requirement for any distribution of aggregate damages. The matter is remitted to the CAT to reconsider certification applying the correct legal approach.

Application for a Collective Proceedings Order refused by the Competition Appeal Tribunal: [2017] CAT 16 (also reported as [2018] Comp AR 1). Successful appeal by the representative to the Court of Appeal: [2019] EWCA Civ 674. Further appeal to the Supreme Court: [2020] UKSC 51 (this judgment).