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The Mastercard Collective Action Case and its Wider Implications

Updated: Oct 29, 2021

On 11/12/20, the Supreme Court ruled that the Competition Appeal Tribunal (CAT) must reconsider the collective action against Mastercard which it had previously thrown out. As a result, the case can now proceed and will be sent back to the CAT. If eventually successful, it could result in a pay-out of £14bn to be divided between the 46 million eligible people. The ruling has given the go-ahead for the first mass consumer claim of its kind and could pave the way for many more similar cases in the UK.

The alleged claim is that Mastercard’s interchange fees (the fees that it charges retailers for card use which are then often passed on to consumers in the form of higher prices) were too high and broke competition law. It was brought by Walter Merricks, a former financial ombudsman, in 2016 on behalf of all individuals over the age of 16 who were resident in the UK for at least three months between 1992 and 2008 and who bought either an item or service from a UK business which accepted Mastercard. The case stems from a 2007 European Commission ruling that interchange fees for the use of Mastercard debit and credit cards breached competition laws.

The CAT had previously turned down the claims on two grounds: (1) there was inadequate pass-on data and (2) that allocating losses between class members did not account for individual losses.

Mastercard, in response to the ruling, has said that it “disagrees fundamentally with the basis of the claim’, suggesting that “it is being driven by ‘hit and hope’ US lawyers, backed by organisations primarily focused on making money for themselves”.

What is the wider picture?

This case is one of the first mass consumer ‘opt out’ collective action cases launched under the UK’s Consumer Rights Act 2015. Under the Act, opt-out collective procedures may be certified for breaches of competition law. The Act has also increased the maximum number of years that consumers and companies can bring a case from two to six, making it easier for consumers and companies to seek compensation in competition claims.

Class action cases are far more common in the US than the UK for at least two reasons. Firstly, procedural rules in the US favour class actions. Secondly, in the US, the loser does not have to pay for the costs of litigation. Cases in the US have resulted in large pay-outs to huge numbers of people. For example, in 2016, a federal judge in San Francisco approved of a £14.7bn settlement resulting from a Volkswagen scheme to cheat emission tests on its diesel cars. The settlement provides funds for vehicle buybacks at market values prior to the scandal, as well as additional cash payments of between $5,100 and $10,000 each for 475,000 diesel car owners. A major advantage of mass claims is that plaintiffs, who would otherwise receive nothing if they cannot afford attorney costs, are able to potentially receive compensation.

The Supreme Court’s ruling has made it easier for large numbers of individuals to be considered to be a class and to bring an action. It paves the way for further consumer class-action cases which have struggled to gain traction. Kenny Henderson from law firm CMS suggested that the ruling could lead to “a shift towards the class action culture that we associate with the US”, encouraging class actions to be filed against other large companies. Rocio Concha, director of policy and advocacy at consumer group Which?, described the ruling as a “hugely important win for consumers”, stating that “[f]rom today, the route to collective redress will be fairer, simpler and more attainable, and many cases that are currently on hold will be able to proceed to trial”.

It will be interesting to see what happens to the Mastercard case, in which Supreme Court ruling is just one more step towards the potential pay-out. Perhaps in the future, we will see many more cases of its kind in the UK.

Herbert Smith Freehills and class actions


HSF have a long history of acting for companies faced with class actions and have acted in many of the largest and most complex class action cases in recent years. For example, they have advised in litigation brought by former shareholders of Lloyds Banking Group in Sharp v Blank [2019]. This case concerned the acquisition of Lloyds TSB’s rivals, HBOS, during the heart of the financial crisis in 2008. The claims by the former shareholders were twofold: firstly, that the recommendation given to shareholders was negligent; secondly, that the circular did not contain sufficient information about the risks of acquiring HBOS and/or contained negligent misstatements about HBOS and the acquisition. The claimants alleged that were it not for the negligent recommendation, the acquisition would not have gone ahead. In November 2019, the court dismissed the claims, suggesting that the defendants were not negligent.


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