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Merricks v Mastercard: The first opt out class action under the collective proceedings regime will head to trial

  • Legal Development 27 August 2021 27 August 2021
  • UK & Europe

  • Insurance & Reinsurance

On 18 August 2021, the Competition Appeal Tribunal (CAT) handed down an eagerly awaited judgment in the Merricks v Mastercard case, giving the massive opt-out group action the green light to proceed. This is a significant development, which could see an increase in these large scale claims proceeding in the UK.

Merricks v Mastercard: The first opt out class action under the collective proceedings regime will head to trial


The background to this case is well known, but for more information on the previous judgments, please see our briefing note: A Class Act: Mastercard Incorporated and others v Walter Hugh Merricks CBE [2020] UKSC 51.

Suffice to say, the journey to this judgment saw the CAT originally rejecting the case as suitable for a collective proceedings order (CPO) and the Court of Appeal and Supreme Court finding that the CAT had erred in its decision, leading to the case being remitted back to the CAT for reassessment to be determined in accordance with the appellate judgments.

The CAT’s August 2021 Judgment

There are two conditions for the grant of a CPO, as set out in section 47B of the Competition Act 1998 (as amended). The first concerns authorisation of the person seeking to bring the proceedings as the representative of the proposed class (the authorisation condition). The second requires that the claims are eligible for inclusion in collective proceedings (the eligibility condition).

The Authorisation Condition

Although the CAT had held, back in 2017, that Mr Merricks had satisfied the authorisation condition to be representative of the proposed class, this was then subject to challenge by one member of the proposed class, arguing various points of conflict in relation to Mr Merricks’ former role as the Chief Financial Ombudsman. The CAT decided that there were no grounds on which to hold that Mr Merricks had a conflict of interest with the members of the proposed class.

The CAT also had to consider changes to the funding arrangements since their 2017 judgment. The original funder had been replaced (by Innsworth Capital) thereby requiring a new litigation funding agreement (LFA) to be put in place. The CAT was required to consider this in the context of whether to authorise the applicant to act as the class representative, namely whether they can act fairly in the interests of the class, including through the management of the proceedings, which encompasses having access to sufficient funds for the proceedings, and also whether they might have a conflict of interest which could prevent them from acting in the best interests of the class.

The CAT noted that there had been an increase in the amount of funding available, with the cover for adverse costs having increased from £10 million to £15 million. Mr Merricks also had access to increased funding for his costs and disbursements in the sum of £45.1 million (up from £33 million). The CAT was therefore satisfied that the level of funding available would enable Mr Merricks to pursue the proceedings adequately for the class members in light of his revised costs budget which anticipated costs in the region of £32.5 million.

The CAT was also satisfied that the LFA was adequately drafted to deal with two other areas where there is potential for a conflict of interest between the funder and class members: settlement of the proceedings and termination of the funding agreement, though a small amendment was made to the termination provision at the CAT’s request.

Finally, on funding, Mastercard then (understandably) sought an undertaking from the funder that it would discharge a liability for costs ordered against Mr Merricks as it had no standing to enforce the LFA. The LFA expressly excluded any rights that may have arisen under the Contracts (Rights of Third Parties) Act 1999 and the Funder is based out of the jurisdiction. The CAT sympathised with Mastercard’s position: the anticipated costs of the proceedings are vast and Mr Merricks is a private individual who lacks the means to pay these costs. During the course of the hearing before the CAT, it was confirmed that the Funder would provide an undertaking along the lines sought by Mastercard.

The Eligibility Condition

In relation to the eligibility condition, as a result of the Supreme Court’s decision, Mastercard no longer opposed certification. However, there were two outstanding points of dispute on which the CAT was required to rule, namely whether Mr Merricks could amend the proceedings to include (i) deceased persons in the class; and (2) a claim for compound interest.

On the deceased persons issue, the CAT was not persuaded that claims by deceased persons could be included in the class on the basis of the class definition in the existing claim form. Mr Merricks therefore sought to amend the claim form. While the CAT observed that there is no difficulty, in principle, in having a class definition that includes the estates of deceased persons, that was not what Mr Merricks was seeking here. Rather, he was simply treating deceased persons as individuals within the class. Considering the various law on the issue, the CAT confirmed that it was not possible to simply include persons who are no longer alive in a class.

The CAT also briefly addressed a limitation argument advanced by Mastercard in relation to the amendment point, even though they had already denied Mr Merricks’ permission to amend. The limitation period for follow-on claims based on the European Commission’s decision in Mastercard expired on 11 September 2016, with Mr Merricks filing his claim a few days beforehand. The CAT considered that, even if it were possible to have claims by deceased persons included in collective proceedings, the application to amend was made long after the limitation period had expired and an amendment to the class definition to add persons who were deceased before the claim form was issued could not be allowed as it does not come within any of the categories in rule 32 of the CAT Rules.

The CAT did note, however, that they drew a distinction between this scenario and the situation of persons who were alive when the claim form was issued but had subsequently died or were to die during the proceedings. In such a situation, the class representative would not be prevented from seeking to apply to amend the claim form and/or CPO to have those persons substituted by the representatives of their estates.

On the compound interest issue, the CAT noted that this was included in the claim form from the outset and that such a claim would add about £2.2 billion to the claim when compared with simple interest.

Mr Merricks had alleged that all class members would either have incurred borrowings or financing costs to fund the overcharge they suffered or have lost interest that they would otherwise have earned through deposit or investment of the overcharge, or some combination of the two. Mastercard submitted that the CPO should exclude claims for compound interest on the basis that this was not a common issue across the class and that no plausible or credible method had been put forward for calculating the loss suffered.

The CAT noted that the Supreme Court had accepted a Canadian decision as persuasive on the issue of certification which required a “plausible or credible” method of calculating the loss and that neither party in these proceedings had sought to argue that this was not an appropriate approach. The CAT ruled that, in the absence of a credible or plausible method of estimating what loss by way of compound interest was suffered on an aggregate basis, this head of claim is not suitable for an aggregate award. Class members would, however, remain entitled to seek simple interest under statute.

According to Mastercard, the CAT’s decision on these issues has reduced the value of the overall claim by around 35 per cent to just over £10bn, though Merricks maintains that the value of the claim is much higher.

Consequently, the CAT made a CPO pursuant to s47B(4) on an opt-out basis. The CAT will now need to hear further submissions from the parties as to the domicile date and date for opt-in and opt-out notifications to be set out in the CPO, and as to the means by which the CPO should be publicised to class members.


The CAT’s judgment is undoubtedly significant as it represents the first class action to be certified on an opt-out basis since the Competition Act was amended in 2015 and one can imagine that claimant lawyers and litigation funders will be actively seeking out new opportunities on behalf of consumers off the back of this decision. Given the opt-out nature of these actions, there is the potential for significant class sizes creating an exposure to substantial damages payments and high defence costs.

But the process has by no means been smoothed out. The case has been through a number of procedural hurdles just to reach the CPO stage, but this is perhaps not unexpected in the circumstances. Indeed, as the CAT conceded in its judgment, “[i]t is perhaps inevitable for such a new form of proceedings that certification of collective proceedings by a CPO raises issues that are novel”. Each set of proceedings that come before the CAT seeking a CPO will undoubtedly raise new issues and it may take a number of years before there is a reasonable body of case law on which practitioners can rely in this developing regime. A number of judgments are expected shortly in relation to cases that had been stayed pending the Supreme Court’s judgment and the CAT reassessment, so it will be interesting to see how the landscape looks after these have been handed down.

The CAT’s judgment also provides useful insight into how they view the role of funding in such class actions and provides a steer as to what they will be looking for from funders as part of the authorisation condition. For insurers and other interested parties, the information discussed in the judgment around the level of funding made available and the class costs budget may serve as useful intelligence on likely defence costs for similar actions in the future.


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