COMPETITION BULLETIN

The Court of Appeal today gave its much-anticipated judgment in the application to bring collective proceedings against MasterCard: see Merricks v MasterCard Incorporated and others [2019] EWCA Civ 674.  It is a major victory for the Applicant and will reinvigorate the collective proceedings regime, which has seen disappointingly few cases brought since its introduction in 2015.

The background is well-known.  Between 1992 and 2008 MasterCard infringed competition law through the imposition of an unduly high fee which was effectively paid by retailers.  Many retailers have brought claims against MasterCard, in the course of which MasterCard has argued that the retailers largely or wholly passed on the overcharge to their own customers.  That must have seemed a sensible defensive strategy, at least until Mr Merricks arrived on the scene seeking to bring collective proceedings in respect of the loss suffered by some 46.2 million consumers – which (given what MasterCard has said about the high level of pass-on) his experts estimated at some £14 billion.

We have blogged before on the reasons why the Competition Appeal Tribunal rejected Mr Merricks’ application.  In very broad summary, it considered that (a) the Applicant had not done enough to show how it would go about assessing the overall damage suffered by consumers – a complex task given that it will involve considering pass-on in several market sectors over a long period, and (b) even if one could calculate the overall damage suffered, it would be impossible to calculate the loss suffered by each individual class member, even on an approximate basis.  The Court of Appeal rejected both of these arguments.

On the question of whether the Applicant had done enough to show how it would assess the aggregate damage, the key part of the Court of Appeal’s analysis is at [50], where it said (paraphrasing Canadian jurisprudence which the Court endorsed):

“the function of the Tribunal at the certification stage is to be satisfied that the proposed methodology is capable of or offers a realistic prospect of establishing loss to the class”

That is a fairly low threshold and the Court held that it was not necessary for the Applicant, at the certification stage, to specify in detail what data would ultimately be available.  The Court observed that if, as proceedings proceed, it becomes clear that it will not be possible to calculate the overall loss, the Tribunal can revisit whether it is appropriate to allow the proceedings to continue.

On the question of whether it is necessary to prove the loss suffered by each individual class member, the Court held that it is not.  This is the most important part of the judgment.  In short, the Court held that if an Applicant seeks an aggregate award of damages, reflecting the overall loss to the class, then it is not necessary to prove any individual’s loss – or for that matter, even to prove that any individual class member suffered loss at all.  All that matters is that the overall loss can be calculated.

When, at the end of the proceedings, the Tribunal comes to decide how to distribute the loss to each class member, it may be appropriate to try to give them each a sum reflecting their own loss; but if that is not necessary and other approaches may also be adopted.  In this case, Mr Merricks accepts that it will not be possible to give each consumer a sum reflecting their individual loss, and the proposal is that each one of the 46.2m consumers will get a fixed amount depending on the period of time when they were in the class.

It would obviously be an exaggeration to say that this judgment solves all of the problems with the collective proceedings regime.  For one thing, Mr Merricks still has a long road to travel, and none of us should make any plans just yet for the hundred pounds or so that might be coming our way.  For another thing, there are other difficulties with the regime, some of which are exemplified by the Pride case which we have blogged about previously.  But on any view today’s judgment is a very important one, and it can be expected to breathe new life into a regime which has not, as yet, lived up to early expectations.