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Partner Becca Hogan discusses the Merricks v Mastercard case, the largest collective action in British legal history.

The largest collective action in British legal history, the Merricks v Mastercard case, is valued at an estimated £14 billion, and concerns the alleged overcharging of some 46 million individuals between 1992 and 2008. The case was recently certified by the Competition Appeals Tribunal (CAT) as the UK’s first ever opt-out collective proceedings order. This means that the millions of individuals affected will be automatically treated as a claimant, unless they actively choose to opt out.

This landmark decision comes four years after the CAT rejected Merricks’ first attempt to have the case certified  on an opt out basis. The case illustrates both the dogged determination of Merricks’ legal team and the benefits of litigation funding, which has made it possible for this complex and hard-fought case to be brought to this juncture.

Merricks reacted to the recent CAT judgment by saying, “Mastercard has thrown everything at trying to prevent this claim going forward, but today its efforts have failed. The tribunal’s ruling heralds the start of an era of consumer-focused class actions which will help to hold big business to account in areas that really matter”.

The judgment cited the 2020 Supreme Court ruling made in this case which noted the necessity of collective actions in such consumer cases. In Mastercard v Merricks [2020] UKSC 51, Lord Briggs held that:

“Proof of breach, causation and loss is likely to involve very difficult and expensive forensic work, both in terms of the assembly of evidence and the analysis of its economic effect. Viewed from the perspective of an individual consumer, the likely disparity between the cost and effort involved in bringing such a claim and the monetary amount of the consumer’s individual loss, coupled with the much greater litigation resources likely to be available to the alleged wrongdoer, means that it will rarely, if ever, be a wise or proportionate use of limited resources for the consumer to litigate alone.”

The recent CAT judgment was not entirely in the claimants’ favour, however. The tribunal declined to allow the estates of deceased claimants to participate in the collective action, and it also refused to allow compound interest to be applied to any damages awarded. The tribunal observed that “if only a minority of class members suffered loss by way of compound interest … we would find it difficult to see how a claim for compound interest can raise a common issue across the class.”

The issue of compound interest was substantial, with the judgment noting that “as at January 2021, the claim with simple interest would be about £13.8 billion whereas with compound interest it is estimated at about £16 billion. Thus the claim for compound interest alone adds some £2.2 billion to the total award sought”.

The progression of the first-ever opt-out collective action in British legal history will no doubt have many further twists and turns. It will be fascinating to follow the progress of this case, not least since other substantial opt out collective actions are likely to follow in its wake.