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Merricks collective action: CAT rules that Mastercard is not permitted to advance a counterfactual based on an alternative, exemptible interchange fee


The Competition Appeal Tribunal handed down a significant judgment today on preliminary issues arising in the Merricks collective proceedings against Mastercard. 

Mastercard sought to establish by way of defence to these collective proceedings that, absent the unlawful multilateral interchange fee (MIF) established by the Commission Decision, it would have adopted an alternative MIF that would have been exempt and that damages due to the class should be limited by reference to that counterfactual.  The CAT ruled that Mastercard is not permitted to advance such a defence for two reasons.  The first is because Mastercard is bound by the Commission Decision which, properly construed, established that for the period covered by the Decision the relevant Mastercard rules and MIFs were not exempt.  The second reason is that it would be an abuse of process for Mastercard to advance that defence in circumstances where it was open to it to seek exemption from the Commission of an alternative level of MIF but Mastercard chose not to pursue that course of action.

The CAT further ruled on the law applicable to the collective proceedings.  The CAT accepted Mr Merricks’ submission that the applicable law as regards purchases made by consumers in the UK from merchants in other European countries is the law of the country of residence of the consumer (England or Scotland as the case may be); and not the law of the country in which the merchant was located, as Mastercard sought to argue.  For the latter period of the claim, the CAT reached that conclusion on the basis of section 11 of the Private International Law (Miscellaneous Provisions) Act 1995, alternatively s. 12 of the same Act.  The CAT endorsed the reasoning of Barling J in Deutsche Bahn v Mastercard [2018] EWHC 412 (Ch) but reached a different conclusion on the facts.  For the earlier period of the claim, the CAT reached its conclusion on the basis that the exception to the common law double actionability rule applies.  The key consideration in each case was that the recovery of damages by consumers is the most significant element of the tort in these proceedings.

The CAT also considered two issues of limitation/prescription. The first was the proper interpretation of the regime which applies to claims which arose before 1 October 2015 but which were made after that date. This raised the issue of the proper treatment of claims which, in the civil courts, would have been time-barred by 20 June 2003 (which is the date on which the original s.47A of the Competition Act 1998 came into force, together with the 2003 CAT Rules). The CAT found against Mr Merricks on this point, holding that such claims were time-barred in the collective proceedings. The second issue was the point at which Scots law claims would have prescribed in the civil courts. The CAT found in Mr Merricks’ favour on this issue, holding that the infringement was a “continuing act” under Scots law, and so time only began to run at the end of the infringement, namely 21 June 2008. The CAT held that any appeal against this particular aspect of its judgment should go to the Court of Session, and that for those purposes the proceedings were to be treated as proceedings in Scotland. 

Marie Demetriou KC, Victoria Wakefield KC and Crawford Jamieson, instructed by Willkie Farr & Gallagher (UK) LLP, represented Mr Merricks, the class representative.