The UK introduced a new collective proceedings regime for competition damages claims in October 2015.[1]  The early years of the new regime were characterized by cautious uncertainty as the Competition Appeal Tribunal (CAT) and the appellate courts grappled with identifying the standards for certification.[2]  It took almost six years before the CAT certified the first claim in Merricks in August 2021.[3]  The CAT subsequently certified 10 other claims in less than two years, which in turn, encouraged additional claims to be brought.

More recently, however, the CAT has declined certification of two FX cases[4] and a proposed opt-out claim against Meta.[5]  In keeping with this trend, most recently, on 8 June 2023, the CAT declined to grant the applications for collective proceedings orders (CPOs) in four related cases against Mastercard and Visa (Judgment).[6]  Specifically, the CAT found that the proposed class representatives (PCRs) had failed to “bring forward coherent proposals and to show a practical way forward to develop evidence to take the case to trial”.

The Judgment provides a useful summary of the legal framework for certification as informed by the recent case law, highlighting in particular the requirement for PCRs to advance a methodology that could serve as a “blueprint identifying the issues for trial and how they might be resolved”. 


Source: Supreme Court judgment in Sainsbury’s,[7] page 3

Mastercard and Visa each operates four-party payment card schemes.  Issuing banks (Issuers) and acquiring banks (Acquirers) can join the schemes, subject to complying with the scheme rules.  Under a four-party scheme, the Issuers issue payment cards to cardholders while merchants enter into relationships with Acquirers, which allow the merchants to accept the schemes’ payment cards in return for the payment of a merchant service charge (MSC).  To settle a transaction between a cardholder and a merchant, the Issuer pays the transaction price less the multilateral interchange fee (MIF) and sometimes scheme fees to the Acquirer, who passes the payment on to the merchant, less the MSC.

The present cases concern two specific types of MIFs:

  • Commercial MIFs that apply to transactions made using commercial payment cards issued to business users rather than consumers; and
  • Interregional MIFs that apply to “interregional” transactions, which the PCRs define as transactions where the Issuer is located in a different region from the merchant where the card is presented (e.g., North America and the EEA).

The PCRs sought to bring collective proceedings against each of Mastercard and Visa on an opt-in basis in respect of large merchants (those with annual turnover of £100 million or more) and on an opt-out basis in respect of smaller merchants (those with annual turnover of less than £100 million).  The PCRs alleged that the Commercial MIFs and Interregional MIFs set by Mastercard and Visa fixed a price floor for the MSCs, which were higher than they would otherwise have been, resulting in merchants being overcharged.

Although there have been prior damages claims relating to MIFs, they related to MIFs applicable to intra-EEA and UK domestic consumer payment card transactions.  There are no binding decisions in relation to the setting of either Commercial or Interregional MIFs.  Further, in Dune v Mastercard,[8] the CAT refused a claimant’s application for summary judgment on the question of liability in relation to Commercial and Interregional MIFs, finding that it was arguable that there were factual differences between such MIFs and the other types of MIFs.  The proceedings were therefore being brought on a “standalone” basis (i.e., without the benefit of a decision or judgment that is binding on the CAT) and the PCRs will have to prove that the relevant MIFs infringed competition law.

Certification Requirements

The Competition Act 1998 (CA98) and the CAT Rules 2015 provide that the CAT may only make a CPO if:

  1. It is “just and reasonable” for the CAT to authorize the PCRs to act as class representatives in the collective proceedings;[9] and
  2. The claims are eligible for inclusion in collective proceedings on the basis that they (i) are brought on behalf of an identifiable class of persons; (ii) raise common issues; and (iii) are suitable to be brought in collective proceedings. [10]

In addition, the CAT noted in the Judgment that there is a further requirement that emerged from the case law under which the PCR must provide a “methodology for the proceedings” (original emphasis) that is “closely linked to the questions of common interest and suitability”.  Although the requirement for a methodology “is not expressly part of the statutory test”, it serves as “a broad blueprint identifying the issues for trial and how they are to be resolved”, as well as “provides important material from which the CAT can determine whether the issues are ‘common’ and ‘suitable’ for certification”.

In applying the requirements to the present CPO applications, the CAT started by considering the methodology put forward by the PCRs on the basis that this would inform its approach to the questions of eligibility and authorization:

  • Methodology. 
    • Infringement.  The CAT found that the PCRs had failed to advance a methodology for establishing that Commercial MIFs and Interregional MIFs constituted anti-competitive infringements altogether and would decline certification on the basis of this “material failure” alone.  Specifically, the CAT dismissed the PCRs’ attempt to rely on earlier decisions concerning other types of MIFs, particularly given its earlier judgment in Dune v Mastercard holding that such decisions are not binding in respect of Commercial MIFs and Interregional MIFs.
    • Pass-on.  By contrast, the PCRs did put forward methodologies in respect of the questions of pass-on: (i) by the Acquirers to the merchants (“acquirer pass on”) and (ii) by the merchants to the consumers (“merchant pass on”).  Nevertheless, the CAT criticized the PCRs for having dealt with merchant pass-on in a “highly unsatisfactory way” by not setting out their methodology in detail until shortly before the CPO hearing.  While noting that the PCRs’ pass-on methodologies appeared at risk of being “overly burdensome and disproportionate” (in requiring extensive third-party disclosures and voluminous evidence), the CAT found that they were not “so defective that the applications should be refused outright”.  The exception to this was that the PCRs had not set out any methodology to address the extent to which the approach to acquirer pass-on for non-UK merchants might have to differ in respect of each EU Member State (see further “Common issues” under “Eligibility” below).[11]
  • Eligibility.
    • Identifiable class (opt-out claims).  The CAT was not satisfied either (i) that there was an identifiable class for the proposed opt-out claims or (ii) that it would be possible in many cases for individual merchants to be able to determine whether or not they were class members.[12]  In particular, it “cannot reasonably be assumed” that every merchant has in fact carried out an interregional or commercial card transaction and a large number of smaller merchants are likely on contracts that do not provide for the automatic pass-through of MIFs as part of the MSCs.  The CAT found that no sensible means to determine either question had been advanced by the PCR for the opt-out claims.
    • Identifiable class (opt-in claims).   As the opt-in claims concern larger merchants, the CAT considered that “common sense suggests that it is more likely that they will undertake transactions involving interregional and commercial cards and will be aware of and able to evidence that”.  Such merchants are also more likely to have entered into merchant acquiring contracts under which the MIFs are specifically identified as a component of the MSCs.

      In contrast with its conclusion on the opt-out claims, therefore, the CAT concluded that there was an identifiable class and that it was likely to be possible for individual merchants to establish their class membership for the purposes of the proposed opt-in proceedings.
    • Common issues.  The CAT held that there were issues broadly common to all proposed class members, “most obviously” in relation to liability, and therefore the commonality requirement is met.  As to whether collective proceedings are an appropriate means for the fair and efficient resolution of the common issues (which goes to the question of suitability),[13] however, the CAT expressed doubt arising from the possibility that non-UK merchants might opt in. [14]  It noted that the PCRs had provided “no analysis or methodology” about any of the potential non-UK markets.
    • Suitability.  The CAT also noted that the existence of MIF Umbrella Proceedings[15] (which grouped and managed together a number of ubiquitous issues arising from various MIF claims) narrowed the differences between collective proceedings and individual proceedings.  Nevertheless, the CAT considered that this fact did not confer sufficient advantages on a potential claimant to make individual proceedings more suitable than collective proceedings when weighed against the costs and administrative burden for the merchants to issue their own individual claims.

      Overall, given the shortcomings examined under the other heads relating to suitability, and “the failure of the PCRs to provide an adequate methodology for large parts of the proposed proceedings”, the CAT held that the suitability requirement was not met.
  • Authorization.  The CAT expressed concern over whether the sole director of each of the PCRs was “acting as the controlling mind” given the “long list of defects in the CPO applications” suggesting that “they were not being directed as well as they might be”.  Given the CAT’s decision to decline the applications on eligibility grounds, however, the CAT did not consider it necessary to decide on whether the PCRs should be authorized.

For these reasons, the CAT declined to grant any of the CPO applications in their current forms, pointedly noting that this is despite what the PCRs referred to as the “relatively low bar” set by the Supreme Court’s judgment in Merricks.[16]

Next Steps and Implications

Rather than dismissing the CPO applications altogether, the CAT decided to order a stay of eight weeks to afford the PCRs a further opportunity to address the concerns set out in the Judgment.[17]  The CAT was influenced by the fact that “previous regulatory and Court decisions and the prevalence of existing proceedings suggest they may well have a claim which is generally well suited to collective proceedings” and the defects the CAT identified “should, at least in part, be capable of remedy”.  Nevertheless, the CAT also observed that some of the defects it identified “might not easily be capable of remedy”, such as how the PCRs might resolve the class identification issues in the proposed opt-out proceedings.  The CAT encouraged the PCRs to follow carefully a hearing on the approach for determining pass-on issues held on 23 and 24 May in the MIF Umbrella Proceedings (under which ubiquitous issues arising from a large number of individual merchant claims have been grouped and managed together) and consider how its outcome could “assist them in providing an adequate methodology on [pass-on]”.

The Judgment marks the second time in 2023 (the first being a proposed opt-out claim against Meta)[18] where the CAT declined certification primarily on the basis that the PCRs had failed to advance an adequate methodology.  The CAT highlighted the importance of the methodology requirement, noting that it exists “precisely because of concerns that proposed class representatives might issue proceedings in less than fully developed form” and criticized the PCRs in the presents cases for having “exhibited a casualness about the methodology requirement which is concerning”.  Accordingly, it can be expected that the methodology (or inadequacies thereof) advanced by PCRs will continue to be the focus of future CPO determinations.

[1]        See our alert memorandum “UK Introduces Reforms to Facilitate Private Actions in Antitrust Cases”.

[2]        See, e.g., our newsletter article “U.K. Antitrust Collective Damages Actions”.

[3]        Merricks v. Mastercard [2021] CAT 28.  This followed the Supreme Court’s judgment in the same case upholding the Court of Appeal’s decision to overturn the CAT’s initial dismissal of the certification application and remitting the case to the CAT (Mastercard v. Merricks [2020] UKSC 51).  See our blog post “Mastercard Incorporated and Others (Appellants) v Walter Hugh Merricks CBE (Respondent)”.

[4]        Michael O’Higgins FX Class Representative Limited v. Barclays and Others; Philip Evans v. Barclays and Others [2022] CAT 16.

[5]        Liza Lovdahl Gormsen v. Meta [2023] CAT 10.

[6]        Commercial and Interregional Card Claims I Limited v. Mastercard; Commercial and Interregional Card Claims II Limited v. Mastercard; Commercial and Interregional Card Claims I Limited v. Visa; and Commercial and Interregional Card Claims II Limited v. Visa [2023] CAT 38.  

[7]        Sainsbury’s v. Visa; Sainsbury’s v. Mastercard [2020] UKSC 24/

[8]        [2021] CAT. 

[9]        CA98, section 47B(5)(a) and CAT Rules, Rule 78.

[10]       CA98, section 47B(5)(b) and CAT Rules, Rule 79.

[11]       Judgment, paragraph 169.

[12]       The latter point is also one of the factors for the CAT to determine whether the claims are suitable to be brought in collective proceeding: CAT Rule 2015, Rule 79(2)(e).

[13]       CAT Rule 2015, Rule 79(2)(a).

[14]       There is an asymmetry in the geographic scope of the definition of the proposed classes: (i) for the opt-in claims, the proposed class covers transactions that occurred in the EU before 1 January 2021 but (ii) for the opt-out claims, the proposed class only covers transactions that occurred in the UK.

[15]       1517/11/7/22 (UM).

[16]       Mastercard v. Merricks [2020] UKSC 51.

[17]       Mastercard v. Merricks [2020] UKSC 51.

[18]       Liza Lovdahl Gormsen v. Meta [2023] CAT 10.