On 16 April 2019, the UK Court of Appeal ruled that the Competition Appeal Tribunal ("CAT") had incorrectly refused to certify a major collective action brought against Mastercard. The collective action seeks approximately GBP 14 billion in damages on behalf of an estimated 46.2 million customers following the European Commission's 2007 decision that the multilateral interchange fees set by Mastercard infringed Article 101 Treaty on the Functioning of the European Union.
In 2015, the UK legislator introduced 'opt-out' collective actions in the Consumer Rights Act. In order to bring a valid collective action, a certified representative is required to apply for a collective proceedings order ("CPO") from the CAT. In July 2017, in the second ever application, the CAT refused to issue a CPO in the case against Mastercard on the grounds that, inter alia, the claimants had not advanced a workable methodology to determine the level of pass-on of the overcharge to consumers and the difficulty of devising an appropriate method to distribute any aggregate award of damages.
In relation to pass-on, the UK Court of Appeal agreed that the CAT had set too high an evidential hurdle for the appellant at the certification stage. Citing Canadian case law with approval, the UK Court of Appeal agreed upon 'the importance of certification as a meaningful screening device' which does not require a 'determination of the merits of the proceedings'. The UK Court of Appeal considered that it would run counter to the provisions of the Consumer Rights Act to require each individual claimant to establish loss in relation to his or her own spending. Thus, pass-on to consumers generally satisfies the test of commonality of issue necessary for certification. As a result, it had not been appropriate for the CAT at certification stage to require the representative and his experts to specify in detail what data would be available for each of the relevant retail sectors, as the experts had already identified other potential data sources.
In relation to distribution, the UK Court of Appeal found that it is not necessary for the CAT to engage in a detailed assessment of how any potential award would be distributed at the stage of assessing whether to issue a CPO. Rather, distribution is a matter for the trial judge to consider following the making of an aggregate award. Overall, the UK Court of Appeal considered that the changes introduced by the collective action regime in the Consumer Rights Act permitted a court to award aggregate damages by reference to the loss suffered by the represented class as a whole, even if this resulted in certain individuals being over- or under-compensated. In this way, the vindication of the rights of individual claimants is achieved by the aggregate award.
By its latest judgment, the UK Court of Appeal has now set aside the order of the CAT and remitted the case to the CAT for re-hearing. The case is interesting as, to date, no collective action has yet been certified by the CAT. For this reason, the case will be watched closely as guidance for future collective actions.
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