U.K. Class Action Case Could Affect Interchange Policy in U.S.

Friday, January 8th, 2021

A long-running case that was brought to the fore by a former financial ombudsman Walter Merricks was forced to be reconsidered by the U.K.’s Supreme Court. 

Merricks made the allegation that the fees that Mastercard charged merchants for accepting payment from customers (interchange fees) were too steep and “broke competition law.” This directly led to U.K. customers paying much higher prices on their purchases from businesses that accepted Mastercard as payment.

This claim was made on behalf of all individuals over the age of 16 who were considered residents of the U.K. for at least three months between the years 1992 and 2008. These people must have also purchased an item or service from a business based in the U.K. that accepted Mastercard. This amounted to a total of 46 million individuals. 

After The Ruling

After the ruling, Mr. Merricks made the following statement: 

“Enforcement of fair competition laws is vital for this country’s market economy and companies who break these laws can now expect not only to be fined by the regulator but to face much bigger bills in redress claims from those they damaged.”

According to Mastercard:

It “disagrees fundamentally with the basis of the claim. No UK consumers have asked for this claim. It is being driven by ‘hit and hope’ US lawyers, backed by organisations primarily focused on making money for themselves. Mastercard will be asking the Competition Appeal Tribunal to avert the serious risk of the new collective action regime going down the wrong path with a case which is fundamentally flawed.”

Originally, the case was “thrown out” by the Competition Appeal Tribunal (CAT). The Court of Appeal claimed that the CAT utilized an erroneous legal test in making its decision. This ruling is now being supported by the majority of the Supreme Court judges. 

Wider Repercussions

Since this ruling, a mass of class actions have been lined up, awaiting their ruling. As a result, the court has now drafted a set of requirements that these consumer legal claims must meet before they can move forward with a trial and any financial compensation can be granted.

Rocio Concha, who is the director of policy and advocacy at consumer group Which? said this:

“The Supreme Court’s ruling will increase access to justice for consumers and set the standard for collective claims of this nature to proceed to trial. From today, the route to collective redress will be fairer, simpler and more attainable, and many cases that are currently on hold will be able to proceed to trial, ensuring victims of anti-competitive behaviour can get the justice they deserve.”

What Is To Come

The Supreme Court decision has ultimately given the green-light to this “first mass consumer claim” of its kind. The projection is that, since this event has set a precedent, many more will follow. It is also believed that it will only encourage claimant law firms to file more claims against large corporations. This can only mean that businesses will have a lot to be concerned about. 

This type of “class action culture” has not typically been seen in the U.K., it is more associated with the U.S. It will be a dramatic shift.