Competition Appeal Tribunal refuses to certify £14 billion class action against Mastercard

The Competition Appeal Tribunal (CAT) has refused to give the green light to a £14 billion class action, which was brought against MasterCard under the "opt-out" regime for competition law cases introduced from October 2015 (as outlined here).

Under this regime, representatives seeking to bring a collective action on behalf of consumers and/or businesses must apply to the CAT for a collective proceedings order certifying the claim before it can proceed. The CAT must consider (among other things) whether the claims raise the "same, similar or related" issues of fact or law and are "suitable" to be brought in collective proceedings, and whether it is "just and reasonable" for the putative representative to act on behalf of the class (including whether the representative can pay the defendant’s costs if ordered to do so).

Here, the CAT refused the application principally on the basis that it was not satisfied the proposed methodology for calculating aggregate damages could be applied on a sufficiently sound basis, or that there was any plausible way of reaching even a rough-and-ready approximation of the loss suffered by individual claimants. In other words, the proceedings would offend against the governing principle of damages for breach of competition law, namely that claimants should be restored to the position they would have been in but for the breach. That meant the claims were not suitable to be brought in collective proceedings.

The judgment also provides important clarifications as to the use of third party litigation funding in such actions and how funding agreements can be drafted in a manner compatible with the relevant statutory provisions.

The present case is only the second application made to date for a collective proceedings order. The first, at the other end of the spectrum, was brought on behalf of consumer purchasers of Pride mobility scooters seeking damages of around £3 million. The CAT adjourned that application to allow the claimant representative to reformulate her claim in certain respects, but the case was abandoned shortly afterward in light of concerns that the costs of pursuing it would outweigh any damages.

For more information on the most recent ruling see our Competition, regulation and trade e-bulletin on the decision.