Mastercard could be forced to pay almost every UK adult £300 after a court ruling paved the way for a £14 billion class action lawsuit.
The legal action being taken by former Financial Ombudsman Walter Merricks claims 46 million UK consumers suffered losses as a result Mastercard’s excessively high card fees.
On Tuesday, the Court of Appeal ruled that the Competition Appeal Tribunal must reconsider the case against the firm after it was thrown out two years ago.
The case will now go back to the Competition Appeal Tribunal which will then decide whether the case should proceed.
Mr Merricks says he is “very pleased” with the decision.
He says: “It is nearly 12 years since Mastercard was clearly told that they had broken the law by imposing excessive card transaction charges, damaging consumers over a prolonged period.
“As a result, we all had to pay higher prices in the shops than we should have done - while Mastercard have pocketed the profits.”
Mr Merricks alleges that over a 16-year period to 2008, the fees Mastercard charged businesses – known as interchange fees – meant consumers paid higher prices on purchases than they should have.
In 2017, the Competition Appeal Tribunal threw out Mr Merricks's claim on the grounds it was not “suitable to be brought as collective proceedings”.
However, senior judges found on Tuesday that the Competition Appeal Tribunal had applied the wrong legal test in deciding whether the claim should go ahead.
Mastercard says it will fight the decision in the Supreme Court if necessary.
A Mastercard spokesperson says: “This decision is not a final ruling and the proposed claim is not approved to move forward, rather the court has simply said a re-hearing on certain issues should happen.
“Mastercard continues to disagree fundamentally with the basis of the claim and we believe UK consumers receive real value from the security, convenience and consumer protection of our payment services.”
This is the first mass consumer claim brought under the new collective action regime introduced by Parliament in the Consumer Rights Act.
The case could end up being the biggest class action in UK history. According to Merricks, anyone over the age of 16 and resident in the UK for more than three months or more between 1992 to 2008 could be in line for around £300.
Merricks says that around 46.2 million could qualify for the payout, including those that never had a Mastercard.
Boris Bronfentrinker, the Quinn Emanuel Urquhart & Sullivan partner representing Mr Merricks, says: “Today is truly a landmark day for all UK consumers that Mr Merricks seeks to represent in a claim to recover the billions in damages caused to them by Mastercard’s unlawful anticompetitive conduct.”
“The Court of Appeal’s judgment also marks a significant day for the collective action regime in this country, after a number of false starts before the Competition Appeal Tribunal.
“This is a satisfying victory, but the focus now shifts to securing compensation for the 46 million UK consumers who lost out as a result of Mastercard’s action.”