Walter Hugh Merricks CBE v Mastercard Incorporated & Ors

This Court considered three preliminary issues arising from collective follow-on proceedings based on the European Commission Decision of 19 December 2007 finding that Mastercard's rules on EEA multilateral interchange fees infringed Article 101 TFEU. The issues were (1) whether historic limitation and prescription periods had been precluded by the Competition Act 1998 and the Competition Appeal Tribunal Rules (the limitation/prescription issue); (2) which law governs claims arising from purchases from foreign merchants for the purposes of limitation or prescription (the applicable law issue); and (3) whether Mastercard could advance a counterfactual based on alternative EEA MIFs said to be exemptible under Article 101(3) (the exemptibility issue).

The Court held that (a) the CAT was correct to refuse to construe the 2015 Rules and related provisions as reviving claims that had already become time-barred or extinguished by prescription prior to the 2003 Rules; the contention that omission of rule 31(4) in the 2015 Rules inevitably effected such a revival was not unavoidable and therefore failed (appellant refused permission on the limitation/prescription issue); (b) on the conflict-of-laws point the CAT was entitled to displace the general PILMPA 1995 rule and the common-law double-actionability rule in the particular circumstances of these collective follow-on proceedings: because the Commission had definitively determined infringement and the proceedings seek an aggregate award for millions of UK consumers, it was substantially more appropriate under section 12 PILMPA 1995 for English or Scots law to govern the issues of limitation and prescription; and (c) the CAT was correct to hold that the Commission Decision, given the way Mastercard ran its case before the Commission, precludes Mastercard from advancing a counterfactual based on alternative exemptible EEA MIFs for the period covered by the Decision, so the appropriate counterfactual is no/default MIF with settlement at par.

The defendant Mastercard appealed three preliminary rulings of the Competition Appeal Tribunal in collective proceedings brought by Mr Merricks as class representative for UK consumers who purchased goods and services between 1992 and 2008 from merchants accepting Mastercard. The proceedings are follow-on damages claims grounded on the Commission Decision (19 Dec 2007) finding that Mastercard's EEA MIFs infringed Article 101 TFEU and were not exempt under Article 101(3).

Nature of the applications/relief sought:

• Challenge to the CAT’s conclusion that historic limitation/prescription rules preclude certain older claims.
• Determination of the proper law governing claims involving purchases from foreign merchants for the purposes of limitation/prescription.
• Determination whether Mastercard may advance a counterfactual based on alternative MIFs that it says would have been exemptible under Article 101(3).

Procedural history: The collective proceedings order was made by the CAT on 18 May 2022 ([2023] CAT 15). Mastercard obtained permission to appeal on the exemptibility point and a rolled-up hearing was granted for the other issues. The Court of Appeal heard argument 1–3 May 2024 and delivered judgment 5 July 2024.

Issues framed by the Court and analysis:

• Limitation/prescription: the Court reviewed the complicated interaction between the Limitation Act 1980, Scots prescription, section 47A CA 1998 as introduced by EA 2002 and amended by the Consumer Rights Act 2015, the 2003 CAT Rules (rule 31) and the 2015 CAT Rules (rule 119). The Court accepted the CAT’s construction that neither section 47E CA 1998 nor Schedule 8A (2017 Regulations) applied to the present proceedings, and applied the Interpretation Act 1978 principle that accrued limitation rights are not to be taken away unless a contrary intention is unavoidable. The Court concluded the legislative materials did not unavoidably require revival of claims already time-barred or extinguished by prescription and refused permission to appeal on this issue.
• Applicable law for foreign-merchant transactions: the Court examined PILMPA 1995 sections 11 and 12 and the common-law double-actionability rule. It accepted the VTB Capital framework for identifying elements of the tort and assessing significance, but considered this to be a rare case in which section 12 displaced the general rule. The decisive factors were that (i) infringement had been conclusively determined by the Commission, (ii) the proceedings are collective, seeking an aggregate award for millions of UK resident consumers, and (iii) the issues remaining for litigation are causation and quantum closely connected to the consumers’ residence. For these reasons the Court dismissed Mastercard’s challenge and upheld the CAT’s conclusion that English or Scots law governs for limitation/prescription purposes.
• Exemptibility: the Court analysed the Commission Decision in detail and Mastercard’s procedural posture before the Commission. Mastercard did not advance empirical evidence to justify a particular MIF level and ran a high-level argument that MIFs were lawful in principle. The Commission rejected that approach and ordered removal of the EEA MIF architecture. The Court concluded the Decision bound the Tribunal as to exemption for the period covered and therefore Mastercard could not rely at trial on alternative exemptible EEA MIFs as the counterfactual; the correct counterfactual is no/default MIF with settlement at par. Because of that construction, the Court did not decide Mastercard’s separate abuse of process contention.

Wider context noted by the Court: the judgment recognises the unusual legal and procedural features of collective follow-on damages claims founded on a Commission Decision and the practical consequences for conflict-of-laws and limitation issues where the infringement has been determined by a competition authority.

The appeals were dismissed. The Court refused permission on the limitation/prescription point and upheld the CAT on that issue, concluded that for foreign-merchant (remote) purchases PILMPA 1995 section 12 warranted displacing the general rule so that English or Scots law governs limitation/prescription for the class members, and rejected Mastercard’s attempt to run a counterfactual based on alternative exemptible EEA MIFs because the Commission Decision, given how Mastercard had run its case before the Commission, bound the Tribunal for the relevant period and the appropriate counterfactual is no/default MIF with settlement at par.

Appeal from the Competition Appeal Tribunal ([2023] CAT 15). Permission to appeal granted in part (exemptibility issue; Green LJ 10 August 2023); rolled-up oral hearing before the Court of Appeal on 1–3 May 2024; judgment of the Court of Appeal delivered 5 July 2024 ([2024] EWCA Civ 759).