Litigation Update
The case of Merricks v Mastercard is one of the most significant class action lawsuits in UK legal history, with major implications for competition law, consumer rights, and litigation funding.
Background
A class action lawsuit is a legal claim collectively brought by a large group of people (the "class") against a single defendant (usually a corporation or institution), for similar harm or wrongdoing. Instead of filing multiple individual claims, one representative (or a small group) brings proceedings on behalf of all affected individuals.
Originally filed in 2016 off the back of a decision from the European Commission; Walter Merricks, a former UK financial ombudsman, brought a ￡14 billion claim against Mastercard on behalf of approximately 46 million UK consumers.
Merricks argued that Mastercard had imposed unlawful credit card fees on transactions processed through its network between 1992 and 2008. It was alleged that these unlawful fees, that breached competition law rules, were passed on to consumers.
Merricks’ Lawyers, Quinn Emmanuel, were successful at the Court of Appeal and Supreme Court in 2020, which allowed the case to go ahead, but more importantly, it set a precedent and a very low bar for Claimants to jump when trying to get their class action certified. At a trial in December 2024 trial, the respective sides agree to settle.
Why it Matters
The case was the first large-scale opt-out class action to be certified under the UK’s Consumer Rights Act 2015. It set a precedent for how mass consumer claims can be pursued, making it easier for consumers to claim damages stemming from corporate wrongdoing.
The Competition Appeal Tribunal (“CAT”) initially rejected the case in 2017, citing difficulties in calculating individual consumer losses. In 2020, the Supreme Court overturned this decision, ruling that a collective claim could go forward even in circumstances where calculating damages for each consumer was complex. This ruling set a precedent and made it easier for future collective actions to proceed in the UK, even without precise individual loss assessments.
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The case also highlighted the role of litigation funders, who help fund legal claims in return for a share of any settlement or damages. Whilst Merricks defended litigation funders, arguing that they “run a substantial risk” of either losing the case or there being no money left over after consumer claims. The case raised fresh concerns about the balance between access to justice and the profits that litigation funders could extract from successful cases.
After nearly 9 years of litigation Mastercard agreed to settle the claim in December 2024 for ￡200 million, a far cry from the original ￡14 billion sought. This highlighted the challenges in quantifying damages in competition cases and balancing corporate liability with fair consumer compensation.
The case has encouraged more class-action lawsuits in the UK, particularly in competition law. Companies now face a greater risk of consumer-driven litigation if found guilty of anti-competitive behaviour.
Final Thoughts
Merricks v Mastercard is a landmark case that reshaped UK competition law and collective redress. While the final settlement was much lower than initially sought, it established the principle that large-scale consumer claims can succeed. It also reinforced the role of litigation funding and set the stage for more collective actions against corporations in the future.
This update is for general purpose and guidance only and does not constitute legal advice. Specific legal advice should be taken before acting on any of the topics covered. No part of this update may be used, reproduced, stored or transmitted in any form, or by any means without the prior permission of Brecher LLP.
Written by Elizabeth Morrison