UK Court Nixes $17 Billion Antitrust Suit Against MasterCard

The UK’s Competition Appeal Tribunal (CAT) has dismissed a $17.2 billion consumer antitrust suit against MasterCard over allegedly overcharging millions of UK customers between 1992 and 2008.

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The British court ruled that the suit cannot be brought under the collective action regime. The panel wrote: “Pass-through cannot be described as a common issue in any meaningful sense. The level of individual spend is manifestly not a common issue.”

In determining the acceptance of a collective action lawsuit, the tribunal considers whether there is anything particularly unique that can’t be addressed in individual complaints.

The tribunal panel added in the decision: “We are not satisfied, and indeed very much doubt, that the claims are suitable for an aggregate award of damages. There is no plausible way of reaching even a very rough-and-ready approximation of the loss suffered by each individual claimant from the aggregate loss calculated according to the applicant’s proposed method.”

The lawsuit, filed by former head of financial services ombudsman Walter Merricks, challenges the control of the credit card association on so-called interchange fees. The term refers to the bank-to-bank fees set by Mastercard on merchants' banks to cover the costs of its card services.

Merricks, on behalf of millions of UK consumers, claims that MasterCard has set operations rules to charge merchants higher interchange fees than the customers would have paid or retailers would have tolerated in a competitive market.

In his lawsuit, Merricks said that the network rules adopted by Mastercard aimed to earn the company higher fees, but were ultimately passed on through increased prices to all buyers, including those who paid in cash and not just the card users.

Merricks expressed his disappointment with the decision and said that he will move forward with appealing against the ruling.

He commented: "The new collective action regime was introduced by the Consumer Rights Act to overcome the difficulty for consumers seeking to recover losses from competition law infringements. I am concerned that this new regime, designed to benefit consumers, may never get off the ground.”

A spokesman for MasterCard welcomed the ruling and said: “As set out in Mastercard’s arguments to date we believe that the claims were completely unsuitable to be brought under the collective actions regime.