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.

Print:
Email this postTweet this postLike this postShare this post on LinkedIn
Photo of Louise Freeman Louise Freeman

Louise Freeman represents parties in complex commercial disputes, and co-chairs the firm’s Commercial Litigation and European Dispute Resolution Practice Groups.

Described by Legal 500 as “one of London’s most effective partners” and by Chambers as “a class act,” Louise helps clients to navigate…

Louise Freeman represents parties in complex commercial disputes, and co-chairs the firm’s Commercial Litigation and European Dispute Resolution Practice Groups.

Described by Legal 500 as “one of London’s most effective partners” and by Chambers as “a class act,” Louise helps clients to navigate challenging situations in a range of industries, including life sciences, technology and financial markets. Most of her cases involve multiple parties and jurisdictions, where her strategic, dynamic advice is invaluable.

Louise also represents parties in significant competition litigation proceedings, including a number of the leading cases in England.

Louise is a key member of our market-leading Privacy and Data Security Litigation team, which advises a broad range of international clients on data privacy-related litigation. She has recently represented a client in an intervention in an appeal in the leading UK case making new law in relation to both data privacy claims and class actions.

Photo of Johan Ysewyn Johan Ysewyn

Johan Ysewyn is widely respected as a highly skilled European competition lawyer, advising on complex competition issues, including on merger control, anti-cartel enforcement, monopolisation cases and other conduct investigations. He acts as Co-Head of the firm’s Global Competition group and as Managing Partner…

Johan Ysewyn is widely respected as a highly skilled European competition lawyer, advising on complex competition issues, including on merger control, anti-cartel enforcement, monopolisation cases and other conduct investigations. He acts as Co-Head of the firm’s Global Competition group and as Managing Partner of the Brussels office.

Clients turn to Johan when they need cutting-edge competition and regulatory advice. He has been advising some of the world’s leading companies for over 30 years on their most complex competition issues. Johan is “an exceptional lawyer who is solution-oriented, has a remarkable ability to rapidly understand our business and has excellent reactivity.” (Chambers Global) Johan “attracts considerable praise for his reliable practice, as well as his great energy and insight into cartel proceedings.” (Who’s Who Legal)

Johan represents clients from around the world in dealings with competition authorities as well as in court litigation. He has in-depth knowledge of regulatory procedures and best practices as well as longstanding relationships with key regulators, in particular at the European Commission. He has also an active advisory practice covering a range of areas of interest to corporates, including the interplay between ESG goals and competition law, the impact of competition law enforcement on digital markets and broad strategic compliance issues.

Johan’s experience spans many industry sectors, with recent experience in telecoms and information technology, media, healthcare, consumer goods, retail, energy and transport. He has advised on several of the most major merger investigations in recent years. In addition, he has represented clients in many conduct investigations.

Johan’s practice also has a strong focus on global and European cartel investigations. He has acted for the immunity applicants in the bitumen and marine hose cartels, and acted for defendants in alleged cartels in financial services, consumer goods, pharmaceuticals, chemicals, consumer electronics and price benchmarking in the oil sector. He has acted for the European Payments Council in the first European Commission investigation into standardisation agreements in the e-payments sector. Johan has written and lectured extensively on international cartel and leniency-related issues. He co-authors the loose-leaf European Cartel Digest and lectures on cartel law and economics at the Brussels School of Competition.

Johan is also one of the leading experts on EU State aid issues, working both for beneficiaries and governments. He has advised a number of leading banks and governments, as well as represented major European airlines. From the cases that can be publicly disclosed, he has been involved in the Fortis, KBC, Dexia, Arco, Citadele, airBaltic and Riga Airport State aid cases.

Photo of James Marshall James Marshall

James Marshall advises on all aspects of competition law and foreign direct investment (FDI) screening, with a focus on merger and FDI control, investigations and enforcement, commercial counselling, and abuse of dominance. He has strong experience in the life sciences, energy & infrastructure…

James Marshall advises on all aspects of competition law and foreign direct investment (FDI) screening, with a focus on merger and FDI control, investigations and enforcement, commercial counselling, and abuse of dominance. He has strong experience in the life sciences, energy & infrastructure, digital and technology, financial services, and sports sectors.

James regularly leads cross-border teams to steer clients through both the merger control and FDI aspects of major global deals. Clients turn to James to help them navigate complex global transactions, and to find innovative solutions to antitrust enforcement and counselling matters.

Earlier in his career, James worked with the UK Competition and Markets Authority (CMA), where he helped develop the UK’s antitrust and regulated sector enforcement regimes. He also practiced for several years in the Asia-Pacific region and has experience advising on competition, regulatory, and public policy issues in Asia and the Middle East.

James is a former Chair of the Competition Section Advisory Committee of the Law Society of England and Wales. He is highly recommended by Legal 500 and is recognized as leading adviser by Who’s Who Legal. James is dual qualified in England and Wales, and the Republic of Ireland.