Merricks: Meaningful compensation
The groundbreaking collective action brought against Mastercard has settled, subject to approval by the Competition Appeal Tribunal (CAT), it was announced yesterday.
The class representative, solicitor Walter Merricks, said the deal would provide “meaningful compensation” to consumers, although the details of the settlement have been kept under wraps pending the approval hearing.
However, the claim’s funder has stated its opposition to the deal.
Reuters cited “a person familiar with the agreement” saying that it was for £200m, far short of the most recent valuation of £10bn. If approved, there will then be a process to distribute the money.
The claim was filed in 2016, the first collective proceedings started under the 2015 Consumer Rights Act. It was only in May 2022 that the CAT made the collective proceedings order, having given it a provisional green light in August 2021.
The claim is a follow-on action after Mastercard was found to have infringed EU law by imposing charges (known as ‘interchange’ fees) on the use of Mastercard debit and credit cards. It is claimed that this increased costs for retailers and consumers and that 46m consumers could be affected.
Mr Merricks, represented by the London office of US firm Wilkie, said: “I am very pleased that after nearly nine years of litigation with Mastercard, I have agreed a settlement that I believe will deliver meaningful compensation to class members who choose to come forward to participate in the distribution of the damages.
“Ever since I began my claim, I have aimed to ensure that the new regime for collective redress can be seen to work effectively and to do that I had to take my case to the Supreme Court.
“I now look forward to presenting the details of the settlement to the tribunal for its consideration and approval.”
The hearing could be this year or early next.
Mr Merricks had funding for £45m of his own costs and disbursements, and a further £15m for Mastercard’s in the event it won. His costs budget was approved in August 2021 at £32.5m. The CAT has been critical of the costs racked up at various points in the dispute.
The claim is backed by third-party funder Innsworth Capital. The CAT said in 2021 that, under the terms of the funding agreement, Innsworth could exit should it look like a return of at least £179m on its investment was unlikely.
The most recent ruling in the case was on the costs of a hearing earlier this year which looked, among other things, at the first stage in the chain of causation. The CAT ordered costs in Mastercard’s favour and an interim payment of £5.4m.
In a statement, Innsworth Advisors, which advises the fund, said: “We strongly oppose this reported settlement which was struck without our agreement.’ It is both too low and premature.’
“Both Walters Merricks and Boris Bronfentrinker [his solicitor at Wilkie] have repeatedly claimed this is a multi-billion pound case, yet they seemed to have rushed to settle for a reported £200m, raising some serious questions.
“We will be challenging this agreement and have already written to the CAT. We will have more to say in the coming days.”
Meanwhile, the CAT will tomorrow be asked to approve two more settlements in the car delivery charges case, in which over 17m cars are said to have been affected by the price-fixing scheme run by five international shipping firms.
The smallest of the defendants, CSAV, settled last year for £1.5m and the latest in-principle settlements are with WWL/EUKOR and “K” Line, for £38m. With market shares of 14.8% and 18.5% respectively, their shares of the total claim value would be £72m.
As part of the settlement sums, WWL/EUKOR has agreed to pay £8.75m towards costs, fees and disbursements, and “K” Line £5.3m. The claim is backed by funder Woodsford.
Class representative Mark McLaren, who is represented by the London office of another US firm, Scott+Scott, said: “These settlements are a major milestone in the claim and if approved, will secure significant compensation for the class.
“I am looking forward to the settlement hearing during which we will demonstrate to the tribunal why these in principle settlements are in the best interest of class members.”
The trial involving the other two defendant groups, MOL and NYK, is scheduled for 13 January 2025, with the pre-trial hearing today. The value of these remaining claim is approximately £100m.
Given the proximity of the trial, Mr McLaren does not intend to distribute the settlement sums to members of the class until the conclusion of the case, when a distribution plan will be agreed.
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