The UK Supreme Court has today ruled in favour of Walter Merricks, the former head of the UK Financial Ombudsman Service., in a hotly-anticipated judgment in the first opt-out competition class action brought in the UK.

Background

Mr Merricks is the proposed class representative for 46.2 million people who, between 22 May 1992 and 21 June 2008, purchased goods and/or services from businesses in the UK that accepted MasterCard cards.  Mr Merricks has valued that claim at in excess of £14 billion (and this sum will likely now be even greater, with interest having continued to run since the claim was filed in September 2016).  Our commentary on the earlier Court of Appeal decision in the case, with which the Supreme Court largely agreed, can be found here.

Outcome

The Supreme Court has dismissed MasterCard’s appeal, which means the case will now go back to the Competition Appeals Tribunal (“CAT”) for a second attempt by Mr Merricks at obtaining a Collective Proceedings Order (“CPO”), but this time with clearer guidance as to the threshold.  Importantly, that threshold has been lowered by the Supreme Court, making it more likely that CPOs will be made going forward.  The many cases waiting in the wings can now move forward to their own CPO hearings, with more certainty as to the threshold the claimants must meet.

The lowering of the bar from the standard set by the CAT seems based – at least in part – on policy considerations, i.e., that collective proceedings have been introduced for a purpose, and it is not the job of the CAT to set up too many hurdles.

Two points of immediate note in the Supreme Court’s judgment are:

  1. The lowering of the bar in respect of the suitability of the claim. The Court found that this is not to be considered in the abstract, but in relative terms, i.e., whether the claim is more suitable to proceed on a collective basis than individually.  This substantially lowers the bar, since it will be more challenging to argue that it would be better for a claim to be brought by each individual consumer than on a collective basis.
  2. The firm guidance from the Supreme Court that the compensatory principle is not an element of the test for granting a CPO. On this point, the two dissenting judges also agreed, meaning any suggestion that this forms part of the test falls away entirely.

The case will now go back to the CAT for a further CPO hearing.  Whilst the Merricks case lives to fight another day, it has not yet been given the go-ahead as a collective claim, and is likely some years away from a trial on the merits (if it ever gets to that stage at all).

The Supreme Court specifically did not criticise the CAT’s detailed questioning and cross-examination of experts at the initial CPO hearing, noting that this achieved “both greater clarity and a considerable improvement in the quantification methodology then being proposed on Mr Merricks’ behalf, in a case of unprecedented size and complexity”.  It is likely, then, that the further CPO hearing in this case – and CPO hearings for other complex cases – will be hotly-contested hearings, with detailed questioning of experts.

Unique procedural issue

Another interesting challenge arose for the Supreme Court in this case.  Handing down of the judgment was recently delayed following the unfortunate passing of the former Supreme Court justice, Lord Kerr, who had presided at the hearing.  This resulted in a perhaps unique procedural issue for the Court to consider.

The judgment was going to be a 3:2 majority decision dismissing the appeal.  However, following Lord Kerr’s death, the panel for this appeal was re-constituted to include only Lords Briggs, Sales, Leggatt and Thomas, leaving the four judges split 2:2 (Lord Kerr having been part of the majority).  The dissenting judges (Lords Sales and Leggatt) agreed to change their position from dissenting to dismissing the appeal, such that the 3:2 majority outcome could be given effect, in accordance with Lord Kerr’s views.  Had they not done so, with the Supreme Court evenly divided, the case would have had to have been re-argued before a different constitution of the Court, at great expense and further delay.

We will be considering the case in more detail and commenting further in the coming weeks.  If you would like to discuss the case in the meantime, please do contact the authors.

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Photo of Louise Freeman Louise Freeman

Louise Freeman focuses on complex commercial disputes, and co-chairs the firm’s Commercial Litigation Practice Group. Described by Legal 500 as “one of London’s most effective partners,” Ms. Freeman helps clients to navigate challenging situations in a range of industries, including financial markets, technology…

Louise Freeman focuses on complex commercial disputes, and co-chairs the firm’s Commercial Litigation Practice Group. Described by Legal 500 as “one of London’s most effective partners,” Ms. Freeman helps clients to navigate challenging situations in a range of industries, including financial markets, technology and life sciences. Most of her cases involve multiple parties and jurisdictions, where her strategic, dynamic advice is invaluable.

Photo of Harry Denlegh-Maxwell Harry Denlegh-Maxwell

Harry Denlegh-Maxwell is an associate in the dispute resolution team, with experience advising clients in complex, high-value disputes, which are often multi-jurisdictional in nature. Mr. Denlegh-Maxwell’s practice spans litigation, international arbitration, and internal investigations, as well as advising clients on sanctions-related issues

Photo of Johan Ysewyn Johan Ysewyn

Johan Ysewyn advises on all aspects of EC, international and Belgian antitrust law, including merger control, compliance, cartel and leniency issues and abuse of dominance cases.  He acts as the head of the firm’s EU Competition group, working from our Brussels and London…

Johan Ysewyn advises on all aspects of EC, international and Belgian antitrust law, including merger control, compliance, cartel and leniency issues and abuse of dominance cases.  He acts as the head of the firm’s EU Competition group, working from our Brussels and London offices.

Mr. Ysewyn’s practice has a strong focus on global and European cartel investigations and he has represented companies from a range of sectors.  He is also one of the leading experts on EU state aid issues, working both for beneficiaries and governments.

He regularly speaks at conferences such as GCR, IBC, IBA, Chatham House and other industry events and has written for numerous legal publications.  He is recognised as a leading competition lawyer by Chambers, Legal 500 and other leading industry guides.  Mr. Ysewyn has acted as a non-governmental advisor to the International Competition Network (ICN).

Photo of James Marshall James Marshall

James Marshall advises on all aspects of competition law and sector regulation and regularly counsels clients on merger control, investigations and enforcement, commercial deals, abuse of dominance, sector regulation, and compliance. Earlier in his career, Mr. Marshall worked with the UK Competition and…

James Marshall advises on all aspects of competition law and sector regulation and regularly counsels clients on merger control, investigations and enforcement, commercial deals, abuse of dominance, sector regulation, and compliance. Earlier in his career, Mr. Marshall worked with the UK Competition and Markets Authority (CMA), where he helped develop the UK’s antitrust and regulated sector enforcement regimes. Clients turn to Mr. Marshall to help them find innovative solutions to complex antitrust enforcement, merger and counselling matters, particularly in regulated sectors.

Mr. Marshall represents clients before UK, EU, and global regulators across a number of industries and has particular expertise in the infrastructure, energy, transport and utilities sectors. He has also advised on numerous complex global financial services cases, and has strong experience advising in the consumer, digital, communications, and sports sectors.

Mr. Marshall practiced for several years in the Asia-Pacific region. He has experience advising on competition, regulatory, and public policy issues in Asia and the Middle East.

Photo of Peter Camesasca Peter Camesasca

Peter D. Camesasca is a partner in Covington’s Brussels and London offices, with 25 years of experience in all major aspects of EU competition law. Peter also co-chairs the firm’s Foreign Direct Investment Regulation initiative, and, has a particular focus on in-…

Peter D. Camesasca is a partner in Covington’s Brussels and London offices, with 25 years of experience in all major aspects of EU competition law. Peter also co-chairs the firm’s Foreign Direct Investment Regulation initiative, and, has a particular focus on in- and outbound aspects of the Asia/Europe interface.

Peter’s experience includes cases under Articles 101, 102 and 106 TFEU, national and multijurisdictional merger and joint venture notifications (including FDI assessments), investigations by multiple enforcement authorities and global antitrust litigation and monopolization issues (including IP cross-over issues). In addition, he advises and litigates on horizontal and vertical cooperation issues, prepares and executes various compliance and dawn raid programs and participates in the installation of in-house training programs, and heads a vibrant private enforcement practice.

Peter has acted before the European Commission, the European courts, the German Bundeskartellamt, the UK Office of Fair Trading and the Competition and Markets Authority, the Belgian Competition Council, and various national courts.