On 11 December 2020, the UK Supreme Court handed down its judgment concerning the standard to be applied when certifying collective proceedings before the Competition Appeal Tribunal (CAT) for breaches of the Competition Act 1998 (the Act). Under the Act, collective proceedings may not be pursued beyond the issue and service of a claim form without the CAT’s certification, in the form of a Collective Proceedings Order (CPO). The certification process requires the CAT to be satisfied as to two main criteria: (1) it must be just and reasonable for the applicant to act as the class representative; and (2) the claims must be eligible for inclusion in collective proceedings, meaning that they must all raise the same, similar or related issues of fact or law and be suitable to be brought in collective proceedings.
In this case, the claimant, Mr. Merricks, brought an opt-out collective proceeding before the CAT in September 2016 in reliance on the European Commission’s 2014 decision that Mastercard had levied unlawfully high multilateral interchange fees (MIF) for international card transactions during the 16-year period between 22 May 1992 to 20 June 2008. The class that Mr. Merricks seeks to represent comprises an estimated 46.2 million people with total estimated damages of £14 billion.
In its July 2017 judgment, the CAT decided that the claims failed the second certification criteria because: (1) the claims were not suitable for an aggregate award of damages due to incomplete data to quantify loss and difficulties interpreting that data; (2) Mr. Merricks’ proposed distribution of any award did not take account of the loss suffered by each class member, rather it proposed that damages be distributed on a per capita basis; and (3) the MIFs being passed on between merchants and consumers was not a common issue to all the claims.
In April 2019, the Court of Appeal allowed Mr. Merricks’ appeal, finding that the CAT had made five errors of law (UK Competition Newsletter, April 2019). Mastercard appealed to the Supreme Court. This is the first collective proceedings case of this kind to reach the Supreme Court.
The Supreme Court agreed with the Court of Appeal that the CAT’s decision was undermined by errors of law and remitted Mr. Merricks’ application for a CPO to the CAT. The Supreme Court held that the CAT had erred in five aspects of law in refusing to grant the CPO. First, the CAT was incorrect to conclude that MIF pass-on by card merchants was not a common issue to all claims. Second, the CAT placed too much weight on its decision that the case was not suitable for aggregate damages. While this is a relevant factor for certification, it is not a condition. Third, whether a claim is ‘suitable’ for collective proceedings or for an aggregate award of damages means suitable relative to individual proceedings. Therefore, the CAT should have asked itself whether the claims were suitable to be brought in collective proceedings as compared to individual proceedings, and suitable for an award of aggregate damages as compared to individual damages. If the forensic difficulties would have been insufficient to deny a trial to an individual claimant, they should not have been sufficient to deny certification for collective proceedings. Fourth, difficulties with incomplete data and interpreting the data were not good reasons to refuse certification. The Supreme Court noted that courts regularly face issues with quantifying loss. Finally, the CAT was wrong to require Mr. Merricks’ proposed method of distributing aggregate damages to take account of the loss suffered by each class member. A central purpose of the power to award aggregate damages in collective proceedings is to avoid the need for individual assessment of loss and the Act expressly modifies the ordinary requirement for the separate assessment of each claimant’s loss.
The CAT will hear Mr. Merricks’ application for a CPO on 25 and 26 March 2021.