On 20 May 2025 the CAT pursuant to section 49A (1) Competition Act 1998 approved the settlement agreed between the class representative, Walter Merricks CBE (“CR”) and Mastercard The settlement sum of £200 million was contested by the funder, Innsworth, as being too low. The CAT will approve a collective settlement approval order (“CSAO”) broadly based on 3 pots proposed by the CR and which determine how the money will be distributed.
The CR’s claim followed on from an EU Commission Decision adopted on 19 December 2007 which held that Mastercard’s EEA interchange fees (MIFs) infringed Article 101 TFEU. EEA MIFs are paid on EEA cross border purchases. The CR claimed damages in respect of these unlawful EEA MIFs, but he also contended that the EEA MIFs caused the UK domestic MIFS to be inflated. The UK MIFs represented 95% of the transactions by value and increased the claim of several hundred £million to a claim for several £billion. Unfortunately for the CR on 26 February 2024, after a three-week trial, the CAT ruled that the EEA MIFs did not in fact cause the UK MIFs to be unlawfully inflated; [2025] CAT 14. Permission to appeal was refused by the Court of Appeal. However, the CR also argued that although actual causation had not been proved, in a counterfactual world where the EEA MIFs were zero the UK MIFs would also have been much lower. This argument (the counterfactual causation) was left over but unless it could be resurrected the claim would be reduced by circa 95%.
There were two main issues that called for determination by the CAT at the settlement hearing. First, was the settlement sum of £200 million just and reasonable? Second, if so, how should the sum be distributed? In essence the CR had proposed 3 pots. Pot 1 would contain £100 million and be ringfenced for the class members. Pot 2 of approximately £50 million would be ringfenced as the minimum return of fees incurred by the funder. Pot 3 of circa £50 million would be in reserve for any further sums to be paid to the class (if there was a higher take up), the funder’s return (i.e., profit) and any payments to charity, the Access to Justice Foundation.
On the first issue the CAT stated that it was “entirely satisfied that the terms of the settlement are just and reasonable.” The £200 million gave value to the EEA MIF claim. The CAT rejected the funder’s submission that the CR should have pursued the claim for the counterfactual causation. The CAT regarded the success of this as “low” and there was a risk that the CR might not receive the £200 million if it was not successful at the forthcoming pass-on trial. Whilst the settlement sum reflected an element of pass-on there was a risk that the CR would not beat this in any pass on judgment. In summary, the CR was justified in settling at less than 2% of the original claim.
On the second issue, the CAT adopted the three pots but altered the proposed distribution. The CAT rejected the funder’s submission that it should receive the majority of the settlement sum. The CAT noted that the CR had desired a maximum take-up for the class by way of a reasonable payment to individual class members. It stated that he should be “commended for pursuing that objective.” The CAT accordingly ringfenced half the settlement sum in pot 1 (the CR being advised that a take up of 5% would result in circa £45 to 2.2 million consumers). As regards pot 2 the CAT allowed fees that had already been paid but remitted the outstanding costs to a costs judge to advise the CAT on whether the remaining sums were reasonable and proportionate. As to the funder’s return (profit) the CAT limited the return to a return on investment of 1.5% which reflected the risk underwritten but also the low settlement sum (compared to the original claim). Payment of this return will be made out of pot 2 and pot 3. Pot 3 would also cover any take up by the class members above the 5%. Any remaining monies would be paid to the Access to Justice Foundation.
It is not necessary for class members to have owned a Mastercard as the loss is said to arise from higher prices generally (because retailers are said to have passed on the overcharge). Consumers are eligible to claim if they lived in the UK for 3 months between June 1997and June 2008 (the starting point for Scotland however is 1992).
The judgment is available here.
Mark Brealey KC, Anneliese Blackwood, Ligia Osepciu, Jack Williams and Alastair Holder Ross appeared on behalf of the Class Representative, instructed by Willkie Farr & Gallagher (UK) LLP.