Merricks v Mastercard: after nearly four years of highs and lows, the Supreme Court endorses a more lenient test for certification of competition claims in the UK


By Gurpreet Chhokar

Special thank you to Simon de Broise, Senior Associate at Collyer Bristow, for his contribution to this article.

In a hotly anticipated ruling, on 11 December 2020, the Supreme Court handed down its judgment in Merricks v Mastercard[1], a collective action seeking £14 billion in damages on behalf of a class comprising 46.2 million consumers, spanning across a 16-year infringement period, in relation to anticompetitive interchange fees set by Mastercard.

The Supreme Court dismissed (by a majority) Mastercard’s appeal against the criteria established in the Court of Appeal for the certification of collective proceedings by the Competition Appeal Tribunal (the CAT).

UK collective proceedings regime

Amongst the reforms ushered in by the Consumer Rights Act 2015 (CRA), which came into force on 1 October 2015, were updates to UK private competition law enforcement, intended to make it easier for individuals and small SMEs to bring proceedings in the UK.

The CAT already had jurisdiction to hear “opt-in” collective proceedings, whereby individual claimants are required to expressly join claims, but only one case was ever brought under this regime – demonstrating its shortcomings as an effective method of redress. The reforms enacted in 2015, introduced “opt-out” collective proceedings, in addition to the existing opt-in proceedings. Opt-out proceedings automatically include all UK domiciled claimants (those domiciled outside the UK must opt-in) unless they wish to expressly opt-out. Further, the CAT’s jurisdiction was extended to hear both follow-on claims (where a regulator has already issued an infringement decision) and stand-alone claims (where no prior infringement decision exists).

Key features of the collective proceedings regime include:

  • A process of “class certification” by the CAT – whereby the claim’s suitability, and the suitability of the class representative to represent everyone in the class, are assessed before a collective proceedings order (CPO) is made.
  • The ability to award aggregate damages without having to make an assessment of the damages to be awarded to each class member.
  • Safeguards to prevent unmeritorious claims– including the prohibition on damages-based agreements between claimants and their lawyers, restrictions on the type of person who can act as “class representative” and checks and balances in relation to legal costs funding arrangements.

As for the certification criteria, for a CPO to be made the CAT must be satisfied that: (i) the class representative is someone who the CAT could authorise to act as a class representative; and (ii) the claim is eligible for inclusion in collective proceedings[2].

The CAT will only authorise a class representative if it is “just and reasonable” to do so and will have regard to certain criteria when determining this[3]. As to whether the claim is eligible for inclusion in collective proceedings, having regard to all circumstances, the CAT will need to be satisfied that the collective proceedings are: (i) brought on behalf of an identifiable class of persons; (ii) raise common issues[4]; and (iii) are suitable to be brought in collective proceedings[5]. As to suitability, which was the main issue in the Supreme Court’s ruling, the CAT is to take into account all matters it thinks fit, including but not limited to matters such as whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues, the size and the nature of the class and whether the claims are suitable for an aggregate award of damages etc.

Background to Merricks v Mastercard

A European Commission decision of 19 December 2007 found that Mastercard had breached European competition laws in relation to the setting of multi-lateral interchange fees (MIFs) that were charged between issuing banks (on behalf of cardholders) and acquiring banks (on behalf of merchants) for transactions using Mastercard issued credit and debit cards.

In September 2016, Mr. Walter Merricks, the class representative made a CPO application to commence collective proceedings on an opt-out basis for damages arising from the Commission’s decision. Mr. Merricks (both class representative and a class member) has held various senior positions in legal and public institutions, including the Financial Ombudsman Service, and has dedicated his career to legal and consumer affairs. The proceedings are being funded by a third-party funder. The proposed class was very wide in that class members did not even have had to own or use Mastercard credit or debit card for their purchases. Mr Merricks alleged that the price increases which merchants passed-on in respect of the MIFs were applied to all purchasers, not just those purchasers using cards (though business customers using Mastercard are excluded).

The Merricks v Mastercard case had a far from straightforward procedural history, having taken Mr. Merricks nearly four years to reach this point. The CPO application hearing was held in the CAT in January 2017.The CAT refused the CPO application sought by Mr. Merricks. Broadly, the CAT did not think that the claims were suitable for collective proceedings, specifically because: (i) the claims were not suitable for an aggregate award of damages; and (ii) Mr Merricks’ proposals for distribution of any aggregate award did not respect the compensatory principle which the CAT considered was an essential requirement of any distributive scheme.

Subsequently, after various rounds in the appellate courts, the Court of Appeal (the COA) in November 2018 confirmed that it did have jurisdiction to hear and determine Mr. Merricks’ appeal insofar as it raised a point of law.

On 16 April 2019, the COA handed down its judgment in relation to Mr. Merricks’ CPO application[6]. The COA, in large part, rejected the CAT’s interpretation of the certification criteria and allowed Mr Merricks’ appeal. Unsurprisingly, given the breadth of the class and the damages involved, Mastercard made an application to appeal the COA’s judgment to the Supreme Court.

The Supreme Court found that the CAT had made five errors in law when considering Mr Merricks’ CPO application.

Key findings in Supreme Court’s decision

This was the first collective proceedings case of this kind to reach the Supreme Court, the UK’s highest court for civil appeals. There was a 3/2 majority in the Supreme Court, with Lord Briggs giving the main judgment on behalf of the majority.

The Supreme Court found that the CAT had made five errors in law when considering Mr Merricks’ CPO application. Lord Briggs said that his reasons largely concurred with the COA but provided his own reasoning in full.

First, the CAT had got the “common issues” question in relation to the passing-on of the overcharge to the class members by merchants wrong (otherwise known as the merchant pass-on issue). It was a common issue and should have been “a powerful factor in favour of certification[7]. In Lord Briggs’ view, the remainder of balancing exercise carried out by the CAT never recovered from this starting point.

Second, the CAT treated the suitability of the claims for aggregate damages as if it were a hurdle rather than merely a factor to be weighed in the balance. For context, at the CPO hearing before the CAT, Mr Merricks’ experts had put forward a methodology supporting an award of aggerate damages. After cross examination of the experts by the CAT, as well as Mastercard’s counsel, the CAT was concerned about the availability of data, therefore making the quantification of damages unreliable on a class-wide basis. The majority of the Supreme Court agreed with the COA that whether a claim was suitable for aggregate damages was one of many relevant factors in the suitability assessment under Rule 79(2) and not a condition.  

Third, the CAT failed to make a comparison between collective and individual proceedings when having regard to the difficulties in relation to quantification of damages of the pass-on merchant issue. An individual claimant would have faced the same difficulties when seeking compensation for increased retail prices across various sectors of the market. If such obstacles would have been considered insufficient to deny a trial to an individual claimant who could show an arguable case as to suffering some loss, then by equal measure they should not have been sufficient to deny certification for collective proceedings[8].

Fourth (and the most serious error in the majority of the Supreme Court’s view), was that the CAT was wrong to move away from the basic principle that courts should try to quantify claims even if there are difficulties quantifying damages due to lack of evidence. Indeed, it was pointed out that these were problems grappled with by the courts and tribunals daily. Instead, the CAT (wrongly) focused on the possible limitations of the data available at trial in arriving at its decision that the claims were unsuitable.

Fifth, the CAT was wrong to regard the compensatory principle as an essential element in the distribution of aggregate damages. There was no requirement to assess individual loss when claiming aggregate damages. The majority held that this was a clear error in law. The CAT’s interpretation was at odds with the very purpose of the legislation – being the ability to award aggregate damages in collective proceedings, thereby avoiding the need for individual assessments of loss.

Finally, a further interesting aspect of the Supreme Court’s ruling is Lord Briggs’ remark that “the certification process is not about, and does not involve, a merits test”[9], which he went on to explain is subject to two exceptions: (i) where a separate application for strike-out or summary judgment is made at a CPO hearing; and (ii) where the court is required to assess the strength of the claims in the context of a choice between opt-in and opt-out proceedings[10]. However, as to what this merits analysis would entail for the second exception was not developed.

Future implications

Depending on which side one finds oneself, the Supreme Court’s judgment will have many implications on future collective proceedings. These include:

  • Damages do not have to be apportioned to reflect individual loss on a purely compensatory basis.
  • Lack of data/evidence does not act as a hurdle when bringing collective proceedings; the CAT must try to quantify the claim as best as it can with what information is available.
  • Parties have more clarification around the “suitability” requirement – which is to be determined according to whether a claim is more suitable to being brought on a collective basis as compared to an individual basis.
  • With a more lenient test for certification, it is likely that more claims will pass the certification stage and proceed to trial. Of course, claimants will still be exposed to hurdles which arise in any litigation.
  • The ruling facilitates the principle of access to justice, particularly for consumers and smaller SMEs (who were at the heart of the CRA 2015 reforms). However, those SMEs and institutions on the wrong side of competition law have increasing exposure to collective proceedings and potentially large damages pay-outs.

A green light has been given for those collective proceedings postponed pending the Supreme Court’s ruling on the certification test. These cases will now be able to proceed in the CAT. Waiting in the wings is the Justin Gutmann v First MTR South Western Trains Limited CPO application in relation to rail ticket fares/boundaries. As this is a stand-alone claim and so no prior existing infringement decision exists, there may be an interesting debate on the merits. Also, worth mentioning are the two competing opt-out collective actions, namely, Michael O’Higgins FX Class Representative Limited v Barclays Bank PLC and Others and Mr Phillip Evans v Barclays Bank PLC and Others, which concern the FX cartel. The European Commission fined five banks for participating in two cartels in the Spot Foreign Exchange market for 11 currencies. Here, the CAT will have to decide between two competing class representatives (which is the first time it will have had to do this). Whilst the Supreme Court’s ruling has provided much needed clarity, the CAT will still have to deal with many interesting and novel issues.  

The Supreme Court’s ruling is a timely reminder for companies to ensure that they are fully compliant with competition law.

Re-visiting compliance

Once again, the Supreme Court’s ruling is a timely reminder for companies to ensure that they are fully compliant with competition law. Companies not only risk substantial fines from regulators, but they are also exposed to private damages claims, and, now, a potential increase in collective proceedings.

Broadly, companies should think about the following:

  • Risk identification

What are the key competition law risks? Depending on the nature of the business or operations, these can take the form of cartels, or other types of anti-competitive agreements such as granting exclusivity (or imposing other terms of sale or purchase), refusal to supply, excluding competing firms from a market etc.

  • Risk assessment

Assessing the risks identified and categorising them as low, medium or high depending on the level of the risk. How many staff are exposed to the identified risks? For example, senior management, those dealing directly with competitors (i.e. sales departments, procurement and purchasing), and those attending trade associations.

  • Risk mitigation and Re-review

Companies should implement training, policies and procedures, both at a general level and a more targeted level, in the case of certain categories of employees. Examples include ensuring employees obtain approval before joining any trade associations, instructions/checklists on what employees should do if they receive commercially sensitive information from a competitor, designating an individual as a competition compliance officer etc. Importantly, companies should re-review the steps above regularly as risks and legal requirements will evolve over time.

Looking ahead

The Merricks v Mastercard case will be remitted to the CAT for a re-hearing and if the CPO application is successful, it will proceed to trial. The Supreme Court’s judgment is a resounding triumph for Mr. Merricks, as well as claimants more generally, with a more lenient test for certification of claims being adopted. This is a welcome boost for the collective proceedings regime, which has had a chequered history since its inception, and will hopefully further increase the effectiveness of private enforcement of competition law in the English Courts. It is likely that we will now see more proceedings pass the certification stage in the foreseeable future, thereby facilitating greater access to justice and redress for consumers and small SME’s affected by anticompetitive conduct. There is no doubt that this is a big win for claimants.

About the Author


Gurpreet Chhokar is an associate with expertise in high-value competition damages claims before the High Court and Competition Appeal Tribunal. Gurpreet has a particular interest in the private enforcement of damages as a result of anticompetitive breaches, as well as consumer redress.


  • [1] UKSC 2019/0118 (the Judgment)
  • [2] Rule 77 of Competition Appeal Tribunal Rules (CAT Rules)
  • [3] Rule 78 CAT Rules
  • [4] “common issues” means the same, similar or related issues of fact or law (see Rule 73(2) CAT Rules)
  • [5] Rule 79 CAT Rules.
  • [6] [2019] EWCA Civ 674
  • [7] Paragraph 66 of Judgment.
  • [8] Paragraph 71 of Judgment.
  • [9] Paragraph 59 of Judgment.
  • [10] Rule 79(3)(a) CAT Rules

The views expressed in this article are those of the authors and do not necessarily reflect the views or policies of The World Financial Review.