What just happened?
On 11 December 2020, the UK Supreme Court handed down a landmark ruling on the hugely anticipated Merricks v Mastercard case.[1] This has followed the £14bn collective action on behalf of 46.2 million consumers, brought against Mastercard concerning anti-competitive interchange fees.[2]
What does this mean?
It has been alleged that this break of competition law has resulted in millions of people paying higher prices in shops than they should have. Consequently, the Supreme Court has held that the Competition Appeal Tribunal (CAT) must reconsider the class action against Mastercard, which it previously declined to consider.[3]
This is significant because Mr Merrick’s application was only the second to come before the CAT. Since the Competition Act 1998 introduced the ability for a class representative to commence opt-out class actions (differing from opt-in class actions).[4] Thus, it is a relatively new and growing area of law. There remain uncertainties as to the approach to be taken regarding the two main criteria for granting a collective proceeding order (CPO).
In deciding whether a claim is eligible for inclusion in collective proceedings, the Supreme Court outlined that the incorrect approach was taken by the CAT. The fact that the assembling of data may involve a “burdensome or expensive process” of disclosure is not a good reason to refuse trial. Especially as in this case there is a large class of people who have a reasonable prospect of showing they have suffered some loss from an already established breach of duty.
What is the impact on the legal industry?
It is predicted that, in confirming a lower initial threshold for class action certification, other consumer mass actions will more easily pass the initial procedural step of obtaining a CPO from the CAT. [5] This case, therefore, provides some hope for those looking to pursue collective actions, especially considering that so far, no claim has been successful.
As a result of an increased likelihood of successful mass consumer claims, a statement by Mr Merrick stipulates that “companies who break these (competition) 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”.[6] This increases the financial risk and potential reputational damage which companies may face from breaking competition law, in addition to potentially being fined up to 10 per cent of global turnover.[7] In light of such serious repercussions, companies will inevitably be more careful in their approach.
Therefore, it is likely that companies will more regularly be seeking legal advice on whether their practices and agreements comply with competition law. Law firms can perhaps promote an understanding of competition law amongst employees through a competition compliance policy and programme.
On the other hand, class representatives and consumers alike will face additional hurdles as the law is further clarified through future cases. Notably, the court noted that a merits analysis will be necessary for determining whether a collective action is to proceed as an “opt in” or “opt out” claim. Yet, it remains unclear how detailed this must be. This is likely to affect how successful future collective actions will be as opt-in claims may not be as commercially viable from a funding perspective.[8]
Written by Sheelpa Maroo
Assessing firms:
#PinsentMasons #GibsonDunn #Freshfields #Hausfeld&Co #Linklaters #SlaughterandMay #Allen&Overy #AddleshawGoddard
References:
[1] Merricks v Mastercard (11 December 2020) <https://www.bailii.org/uk/cases/UKSC/2020/51.html> Accessed on 18 December 2020
[2] Edward Coulson and Andrew Leitch, ‘Merricks v MasterCard: the Supreme Court delivers collective joy to class representatives’ (Bryan Cave Leighton Paisner, 18 December 2020) < https://www.bclplaw.com/en-GB/insights/merricks-v-mastercard-the-supreme-court-delivers-collective-joy-to-class-representatives.html > Accessed on 19 December 2020
[3] Kevin Peachey, ‘Court paves way for £14bn Mastercard claim’ (BBC, 11 December 2020) < https://www.bbc.co.uk/news/business-55273546 > Accessed 18 December 2020
[4] ‘Merricks v Mastercard – Supreme Court Confirms Certification Test for UK Class Actions’ (Gibson Dunn, 14 December 2020)< https://www.gibsondunn.com/merricks-v-mastercard-supreme-court-confirms-certification-test-for-uk-class-actions/ > Accessed on 18 December 2020
[5] (n4)
[6] (n3)
[7] ‘Competition law – the basics’ (Pinsent Masons, 01 December 2020) < https://www.pinsentmasons.com/out-law/guides/competition-law---the-basics> Accessed on 19 December 2020
[8] (n2)
Disclaimer: This article (and any information accessed through links in this article) is provided for information purposes only and does not constitute legal advice.