Menu Search through site content What are you looking for?

A Class Act: Mastercard Incorporated and others v Walter Hugh Merricks CBE [2020] UKSC 51

  • Legal Development 14 January 2021 14 January 2021
  • UK & Europe

  • Insurance & Reinsurance

The much-anticipated Supreme Court judgment, handed down on 11 December 2020, provides guidance on the legal tests to be applied by the Competition Appeal Tribunal (“CAT”) in deciding whether to certify class actions brought under the collective proceedings regime introduced in 2015.

A Class Act: Mastercard Incorporated and others v Walter Hugh Merricks CBE [2020] UKSC 51

The judgment should make it easier for class representatives to bring ‘opt-out’ class actions against corporate defendants whose anti-competitive conduct has caused loss to consumers. As the first collective proceedings case of this kind to reach the Supreme Court, the decision will be welcomed by claimants and litigation funders. The ruling will likely impact other applications for Collective Proceedings Orders (“CPO”) that have been stayed pending the decision.


In 2007, the European Commission (“EC”) found that Mastercard had acted in breach of EU competition law by setting high multilateral interchange fees (“MIF”) that were charged between banks for transactions involving the use of a Mastercard payment card. The EC found that some part of the MIF was likely to have been 'passed on' to the consumer in the form of increased prices. The EC’s decision was upheld on appeal by the European Courts.

In 2016, a former Financial Ombudsman, Walter Merricks CBE, sought to bring a £14 billion class action, on behalf of 46 million customers, before the CAT. The collective proceedings were brought on an 'opt-out' basis (whereby anyone who falls within the scope of the proposed class will be treated as a member of the class unless they expressly withdraw) and sought an aggregate award of damages, representing the loss suffered by the class as a whole, rather than individual damages. This action is being financed by litigation funders.

In order for the action to succeed, Merricks had to satisfy the CAT that it was suitable for collective proceedings and obtain a CPO. CPOs were introduced by the Consumer Rights Act 2015 (amending the Competition Act 1998), providing the possibility of 'opt-out' collective actions for competition law proceedings before the CAT. The Act provides that, once a class representative has filed the claim on behalf of the class “raising the same, similar or related issues of fact or law”, the CAT will consider whether the claim is suitable to be dealt with on a collective basis (whether opt-in or opt-out), taking into account the cost, size and nature of the class. The CAT Rules[1] further provide that the CAT may certify claims as eligible for inclusion in collective proceedings where, having regard to all the circumstances (and the CAT Rules set out a non-exhaustive list of matters to be considered), it is satisfied by the proposed class representative that the claims sought to be included in the collective proceedings:

  • are brought on behalf of an identifiable class of persons;
  • raise common issues; and
  • are suitable to be brought in collective proceedings.  

CAT Judgment (Walter Hugh Merricks CBE v Mastercard Incorporated & Ors [2017] CAT 16)

Following a preliminary hearing in 2017, the CAT did not accept the claim as being suitable for collective proceedings for two reasons. First, it held that the claims were not suitable for an aggregate award of damages, as it determined there was a lack of data to determine the level of 'pass-on' to consumers. Secondly, it held there was an absence of plausible means of calculating the individual loss suffered by claimants so as to devise an appropriate method of distributing any aggregate award of damages. Further, whilst not fatal to the certification, Mastercard also persuaded the CAT that the merchant pass-on issue was not a common issue.

The CAT determined there was no appeal route to its decision but the Court of Appeal disagreed and stated that it had jurisdiction to hear the appeal. On appeal, Merricks submitted that the decision of the CAT was incorrect, on the basis that it adopted the wrong approach to the assessment of the evidence and strength of the case, and the wrong test in relation to distribution of damages.

Court of Appeal Judgment (Walter Hugh Merricks CBE v Mastercard Incorporated & Ors [2019] EWCA Civ 674)

In April 2019, the Court of Appeal found in Merricks’ favour on both of the above issues and set aside the Order of the CAT refusing certification, finding the CAT had made five errors in law:

  1. The CAT had wrongly regarded the merchant pass-on issue as not being a common issue.
  2. At the certification stage, the CAT must be satisfied that the proposed methodology is capable of offering a realistic prospect of establishing loss to the class as a whole. This requirement had been met. Requiring each individual to establish loss in relation to their own spending would run counter to the legislation; an analysis of 'pass-on' at a detailed individual level was unnecessary when an aggregate award was claimed.
  3. The CAT had conducted a “mini-trial” and subjected expert witnesses to extensive cross-examination as to the data and methodology available at that time. It would be for the CAT to consider, during a full hearing at a later stage, all of the evidence in detail. At the certification stage, the CAT should confine itself to considering whether the claim form disclosed a real prospect of success.
  4. A loss-based method of distribution is not required by the CAT Rules. Further, distribution is a matter for the trial judge to consider after making an aggregate award.
  5. The CAT need not have concerned itself, for certification purposes, with the distribution of aggregate damages and it was “premature and wrong” to have refused certification for this reason.

The Court of Appeal also held that certification is a continuing process: where a CPO is made, the CAT may subsequently terminate proceedings if, for example, there is insufficient data for the experts to calculate the rate of 'pass-on'.

The Court of Appeal remitted the application back to the CAT for a re-hearing and Mastercard was given permission to appeal the judgment to the Supreme Court.

Supreme Court Judgment

Mastercard’s Supreme Court appeal was heard in May 2020. In its December 2020 decision, the Supreme Court (by a majority of 3:2) largely upheld the Court of Appeal’s findings, finding that the CAT had made errors in law in rejecting Merricks’ application for a CPO, and, similarly, remitted the case to the CAT for a re-hearing.

Specifically, the Supreme Court found:

  1. The CAT got the common issue question wrong in relation to the merchant pass-on issue, and therefore inevitably failed to include, as an important plus factor in the balance, the fact that this issue, and indeed both the main issues in the case, were common issues. That was an issue of law.
  2. Suitability for aggregate damages was not a hurdle but was one factor to take into account when considering whether the claim was suitable for a CPO. Lord Sales and Lord Leggatt, however, disagreed (though did not formally dissent) that the CAT applied the test incorrectly and thought it had been entitled to conclude that the claims were not suitable to be brought in collective proceedings.
  3. When looking at forensic difficulties, if they would not have prevented an individual claim from proceeding, then they should not prevent a collective claim from proceeding just because it was on a larger scale.
  4. The CAT had failed to take into account the general principle that the court must do what it can with the evidence available when quantifying damages, and had allowed forensic difficulties and obstacles in the likely availability of data to lead it to a conclusion that claimants with a real prospect of (some) success should be denied a trial by the only procedure available to them. The Supreme Court considered this the most serious error of law the CAT had committed. At the certification stage, the applicant does not need to meet any merits or evidential threshold, other than the ordinary tests which apply only if the respondent applies for strike out or summary judgment, or where the court is required to assess the strength of the proposed claims in the context of a choice between opt-in and opt-out proceedings.
  5. The Supreme Court upheld the Court of Appeal’s finding that the CAT was wrong to require Merricks’ proposed method of distributing damages to take account of the individual loss suffered by each class member. Collective proceedings may result in an award of aggregate damages, reflecting the overall loss to the class, and those damages can be distributed to the class in a way that does not have to reflect each individual’s loss.

However, unlike the Court of Appeal, the Supreme Court did not criticise the CAT for conducting a “mini-trial” at the certification stage. Whilst questioning and cross-examination of experts should be a rare occurrence at certification hearings, the present case justified an exception.

The Supreme Court also differed from the Court of Appeal’s finding that any consideration of distribution proposals for the purpose of certification was necessarily premature. Whilst generally true, there may be cases where the issues as to the suitability of the claims for a CPO will be better addressed when the whole of the representative’s proposed scheme, including distribution proposals, are looked at in the round.


The Supreme Court’s judgment supports the Court of Appeal’s decision to provide for a more permissive approach than previously articulated by the CAT in the assessment of whether claims are suitable for a CPO.

The majority’s decision to apply a “relative suitability” test is a major shift. Lord Sales and Lord Leggatt warned that this new approach will “very significantly diminish the role and utility of the certification safeguard”.

The reduced level of scrutiny of collective actions at the certification stage, and the confirmation that certification is a continuing process, may result in an increased risk of wasted time and costs if a claim is ultimately unable to proceed. The indication that CPO proceedings could be terminated due to inadequate data after pleadings, disclosure and expert evidence may create a significant costs risk.

Whilst the judgment may be concerning to potential defendants, some aspects may provide some comfort. At the certification stage, the CAT does not need to decide if the claim is appropriate for an aggregate award of damages. If liability is determined but an aggregate award is later judged to be unsuitable, the class representative will need to face the hurdle of proving losses on an individual basis. The Supreme Court judgment also suggests that, in certain circumstances, cross-examination of the representatives’ experts is permitted at the certification stage.

For now, we await the CAT's re-hearing in light of the Supreme Court's judgment. This judgment is also expected to be significantly influential on the pending applications for CPOs before the CAT (including, in the financial services space, the sizeable Foreign Exchange (FX) cartel claims) and will likely serve to encourage claimants and litigation funders in respect of further competition law based collective actions.

[1] The Competition Appeal Tribunal Rules 2015 (SI 2015/1648)


Additional authors:

Ruth Lane

Stay up to date with Clyde & Co

Sign up to receive email updates straight to your inbox!