Client Alert

UK Opt-Out Class Actions – A New (Anti)Competitive Landscape

In the case of Mastercard v Merricks, the UK Supreme Court confirmed the Certification Test for UK class actions brought in respect of breaches of competition law.

21 Dec 2020


On 11 December 2020, the UK Supreme Court handed down its highly anticipated judgment in the case of Mastercard v Merricks. The case concerned the certification procedure for US-style ‘opt-out’ collective (class action) proceedings before the UK Competition Appeal Tribunal (the “CAT”). Opt-out actions automatically treat anyone who falls within the scope of the proposed class definition as being a member of the class unless they explicitly opt-out or withdraw. Opt-in actions, as the name suggests, require potential claimants to expressly sign up to be a member of the class.

The claim against Mastercard was brought by Mr Merricks as a follow-on damages claim (i.e., a claim based upon an existing decision in 2007 by the European Commission (the “Commission”) that Mastercard had breached EU competition laws in relation to the setting of interchange fees). Damages of c. £14 billion were sought on behalf of an opt-out class of some 46.2 million UK consumers.

The Supreme Court dismissed Mastercard’s appeal and provided further guidance on the legal threshold that must be met for the CAT to certify a claim as collective proceedings. As a result, the CAT will now re-consider Mr Merricks’ application to have the claim against Mastercard certified as opt-out collective proceedings and whether the claim should be allowed to proceed on that basis.


Opt-out class actions are a relatively new development under English law, introduced by amendments to the Competition Act 1998 (the “CA 1998”) by the Consumer Rights Act 2015 (the “CRA 2015”). Opt-out proceedings may be brought by private parties (consumers or businesses) or by authorised representatives on behalf of consumers and businesses in collective proceedings before the CAT.

Under section 47B of the CA 1998, collective proceedings may only progress if they are certified as such by the CAT and a collective proceedings order (“CPO”) has been issued. A CPO will only be granted if the following requirements are met:

1. it is just and reasonable for the claimant to act as the class representative (in this case Mr Merricks);

2. the individual claims must raise common issues of fact or law that are suitable for inclusion in collective proceedings; and

3. the application for a CPO is brought on behalf of an identifiable class of persons.


In December 2007, the Commission found that Mastercard was in breach of EU competition law, specifically Article 101(1) of the Treaty on the Functioning of the European Union, in relation to the setting of multilateral interchange fees (“MIFs”) in cross-border card payment arrangements. MIFs are fees charged by a cardholder’s bank to a merchant’s bank for each sales transaction made at the merchant’s outlet using a payment card (such as a Mastercard). Between 1992 and 2008, these costs, which the Commission found to be disproportionate, were passed onto consumers.

In September 2016, Mr Merricks applied to the CAT for a CPO on an opt-out basis under the new regime. The application was made on behalf of all individuals over the age of 16 who had been resident in the UK for a continuous period of at least three months and who had, between May 1992 and June 2008, purchased goods and services from merchants that accepted Mastercard payments. Collective damages were estimated at over £14 billion.

On 21 July 2017, the CAT dismissed Mr Merricks’ application on the basis that it did not satisfy the second limb of the test under the CA 1998 (that the individual claims must raise common issues of fact or law that are suitable for inclusion in collective proceedings). Although the CAT was satisfied that the claims shared common issues, it found that there was insufficient data to prove and calculate the fees that resulted in higher costs incurred by the consumers (i.e., to show the passing-on of the cost to the consumers in the class).  Further the CAT highlighted the difficulty in identifying and calculating the loss attributable to each individual, taking into account that each consumer must be restored to their original position as if the breach had not occurred (this is the governing principle of awarding damages according to the CAT – although this does not appear in the CAT Rules of Procedure). Accordingly, the CAT held that the individual claims were not suitable for certification as collective proceedings and refused to grant a CPO.

Mr Merricks appealed the CAT’s ruling to the Court of Appeal and, in April 2019, the Court of Appeal overturned the CAT’s decision. The Court of Appeal held that:

  • With respect to the CAT’s position that there was insufficient data to prove and calculate the higher cost of the transaction that had been passed-on to the consumers in the class:
    • Demonstrating a general passing-on of the increased cost to consumers was sufficient to meet the test of commonality of issues required to obtain a CPO (in other words, it was not necessary to assess the increased cost passed-on to each individual consumer).
    • At the certification stage (which is the stage Merricks reached at the CAT), the CAT is only required to assess whether the methodology proposed by the representative for calculating the increased cost passed-on to consumers is capable of demonstrating the loss to the group of consumers as a whole.
    • There should not be a mini-trial at the CPO stage of proceedings. The proposed representative is not required to establish more than a reasonably arguable case in order to obtain a CPO. The CAT should not require the proposed representative to produce all the evidence that would be relied upon at trial or to enter into a detailed outline of the claims’ probative value. The Court of Appeal held that the CAT had considered and assessed the expert evidence before it in a much more detailed way than it should have.
    • The assessment of certification of the claim is a continuing process and the CAT can reassess the appropriateness of the class action categorisation throughout the life of the case (i.e., this is not the final chance for the CAT to assess the merits of the claim for certification).
  • With respect to assessing the loss attributable to the class and how it should be considered:
    • At the certification stage, the CAT need only be satisfied that the claim is suitable for an aggregate award of damages and the aggregate award of damages does not need to be distributed on a compensatory basis. How the damages would be distributed in the future was a matter for the trial judge to consider.

The Court of Appeal’s judgment was seen as lowering the bar to obtain a CPO as compared with the narrower approach previously adopted by the CAT.

Mastercard sought and was granted permission to appeal the Court of Appeal’s judgment to the Supreme Court.


In a 3:2 judgment (more on that below), the Supreme Court dismissed Mastercard’s appeal, agreeing with the Court of Appeal that the CAT had erred in law. The two main questions considered by the Supreme Court were:

1. What is the legal test to certify claims as being eligible for classification as collective proceedings?

2. What is the correct approach to take when considering the distribution of an aggregate award when a party is applying for a CPO?

Lord Briggs, who provided the lead judgment, set out five errors of law in the CAT’s decision:

1. The CAT failed to recognise the breadth of common issues in the individual claims, specifically (1) the issue of overcharge to the consumers, and (2) the issue of the interchange fees being passed from the merchants to consumers.

2.Although the aggregation of damages is a relevant factor to take into account when deciding whether to issue a CPO, the CAT incorrectly considered it as a necessary condition to satisfy in making its decision to grant a CPO and failed to take into account other factors.

3. The CAT applied the wrong test when considering whether the claims were “suitable” for collective proceedings in its interpretation of section 47B of the CA 1998. The applicable test of “relative suitability” poses the question of whether it is preferable to have an aggregate award of damages in collective proceedings or individual awards in multiple individual claims. Either route would have presented the same difficulties in quantifying loss suffered by each consumer.

4. The CAT was incorrect to assume that the lack of available data to quantify loss was a good reason to refuse certification. The Court advised that the CAT should do the “best it can” with the data available and should not preclude a claim from being heard.

5. The CAT wrongly sought to apply the common law compensatory principle, which requires an assessment of individual loss in an aggregate damages case. However, section 47C of the CA 1998 expressly removed such requirement. In fact, the only requirement is that the distribution of damages must be fair and reasonable.


As with all Supreme Court panels, the panel on the Mastercard v Merricks case originally consisted of an odd number of Lords Justice (five in this case). However, due to the sad and untimely passing away of Lord Kerr in early December 2020, the judgment was given by four Lords Justice. Although the Supreme Court ruling was initially intended to be a 3:2 majority with Lord Briggs, Lord Thomas and Lord Kerr in favour of the dismissal of Mastercard’s appeal, and Lord Sales and Lord Leggatt dissenting, Lord Kerr’s death effectively resulted in a 2:2 split. However, as was noted in the judgment, Lord Kerr had made his position clear prior to his passing and it was accepted that the judgment was a 3:2 majority judgment in favour of Mr Merricks.

Although Lord Sales and Lord Leggatt gave a combined minority judgment, they recognised they had the minority view and agreed to support the dismissal of Mastercard’s appeal. Had they formally dissented, the case would have to be re-heard before a new Supreme Court panel which would arguably not have been a just outcome, and also would have resulted in significant further expense as well as a further delay in receiving judgment.


The Mastercard case is the first case of its kind to be brought before the Supreme Court and marks a significant development in the UK competition class action landscape. The Supreme Court has remitted Mr Merricks’ application for a CPO back to the CAT for a re-hearing. Certification of collective proceedings by a CPO is by no means a determination of the merits of the claim. A full trial is still required.

Interestingly, Lord Briggs did not criticise the CAT for conducting a mini-trial at the CPO stage in this case. He noted that the questioning and cross-examining of experts “both should and will be a rare occurrence”. This may mean that, whilst the CAT continues to conduct some form of assessment at the CPO stage, it is unlikely to be as extensive as was conducted at the first stage of this case. As Lord Briggs noted, “it should not lightly be assumed that the collective process imposes restrictions upon claimants as a class which the law and rules of procedure for individual claims would not impose”. This is a clear statement by the Supreme Court that the CAT should not view collective proceedings too narrowly. It will be very interesting to see if the CAT heeds this guidance with regard to the seven CPO applications currently pending before the CAT, which will now all move forward.

It also remains to be seen whether the lower threshold set by the Supreme Court will result in more CPOs being sought by claimant representatives and whether the balance will now shift in favour of opt-out as opposed to opt-in collective proceedings, with respect to decisions of the Commission and the UK’s Competition and Markets Authority. It is also worth noting that, from 31 December 2020, new decisions of the Commission will no longer be binding on UK courts.

Stephanie Pong, London Trainee Solicitor, contributed to the drafting of this alert.



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