U.K. Supreme Court enables $18.5 billion class action against Mastercard

The complex case, brought after Mastercard lost an appeal against a 2007 European Commission ruling that its fees were anti-competitive, could entitle adults in Britain to 300 pounds each if it is successful

A landmark U.K. Supreme Court ruling on Friday has allowed a 14 billion pound ($18.5 billion class action to proceed against Mastercard for allegedly overcharging more than 46 million people in Britain over a 15-year period.

The complex case, brought after Mastercard lost an appeal against a 2007 European Commission ruling that its fees were anti-competitive, could entitle adults in Britain to 300 pounds each if it is successful.

The court dismissed a Mastercard appeal, setting the scene for Britain’s first mass consumer claim brought under a new legal regime and establishing a standard for a string of other stalled class actions.

“Mastercard has been a sustained competition law breaker, imposing excessive card transaction charges over a prolonged period in a way it must have known would impose an invisible tax on U.K. consumers,” said Walter Merricks, a lawyer who is leading the action.

Mastercard said the claim was being driven by “hit and hope” U.S. lawyers.

The Supreme Court ruling sends the case back to the Competition Appeal Tribunal (CAT, nominated in 2015 to oversees Britain’s fledgling, U.S.-style “opt-out” collective class actions for breaches of U.K. or European Union competition law.

Mastercard said it would ask the CAT to “avert the serious risk of the new collective action regime going down the wrong path with a case which is fundamentally flawed”.

The CAT will now have to reconsider granting the necessary collective proceedings order (CPO for the case to proceed to trial, having refusing to certify the case in 2017 because of its complexity. A hearing is expected next year.

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The case centres on so-called interchange fees which credit and debit card companies say they levy on merchants’ banks to cover the costs of card services, security and innovation.

Mr. Merricks, who is being advised by law firm Quinn Emanuel Urquhart & Sullivan, alleges these fees were excessive between 1992 and 2008, that they had to be paid by businesses that accepted Mastercard payments from British consumers and were passed on through increased shop prices.

Under the opt-out collective action regime, U.K.-based members of a defined group are automatically bound into legal action unless they opt out.

Critics say such regimes encourage claims without merit. But others argue they can offer an effective and economic route to compensation for consumers and businesses.

Kenny Henderson, a partner at law firm CMS, said the ruling could trigger many more large claims and a shift towards a class action culture associated with the United States.

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U.K. Supreme Court enables $18.5 billion class action against Mastercard