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Highlights
- Mastercard will have to face the UK’s largest-ever class-action trial.
- UK court approved a class-action trial of more than £10 billion ($14 billion) against the global payments company.
- The Competition Appeal Tribunal (CAT) appointed Walter Merricks, the ex-head of the UK Financial Ombudsman Service, to represent the case on behalf of the affected consumers.
UK court approved a class-action trial of more than £10 billion ($14 billion) against the global payments company Mastercard Inc (NYSE:MA). The company will have to face the country’s largest ever class-action trial over its payment fees. The claims would entitle each of the 46 million adults in the UK to about £300, if successful.
Walter Merricks appointment
The Competition Appeal Tribunal (CAT) appointed Walter Merricks, the ex-head of the UK Financial Ombudsman Service, to represent the case on behalf of the affected consumers after it overruled objections in December 2020. Merrick’s is presenting the case in the UK court on behalf of people aged 16 years and above who purchased goods and services from a UK business through their Mastercard unless they opt-out of the lawsuit.
Walter Merricks alleged Mastercard of charging surplus “interchange” fees (a fee that retailers pay to credit card firms when customers use a card to make payments) during the period May 1992 and June 2008 and fees that were passed on to consumers as retailers hiked prices. However, the judges did not permit Merricks to add deceased individuals and compound interest claims to the lawsuit, which would have to increase the class size to about 60 million. Ruling cuts imposed by the court lowered the potential damages by about 35%.
The ruling sets a tempo for other similar on-hold claims
The ruling was announced after the payment’s giant lost the bid to block the five-year long-running case in the UK Supreme Court. The decision to approve the long-running case as a collective class action is set to establish a standard for other proposed class actions that were stalled to date. Another New York-based credit card provider, The Purchase, faced numerous legal challenges since the courts in the European Union ruled that the company’s card payment fees unfairly restricted competition.
Walter Merricks said that the credit card provider, despite all efforts, failed to prevent the unfair payment claims. Experts believed that the tribunal’s ruling against giants such as Mastercard would mark the beginning of the era for consumer-focused class actions, focusing on holding such businesses accountable for their actions.
Mastercard’s counterclaims
Mastercard, in its statement said that the action was not brought on by UK consumers but was driven by competitor organisations focused on making money. The payments company also believes that a review of critical facts in the coming months will further lower the viability and the size of the claims.
CONCLUSION:
The ruling against unhealthy competition and unfair payment charges on consumers is expected to set standards for other global companies currently operating in the UK or those who intend to commence operations in the future.
