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07.21.17

Mastercard Triumphs against £14 Billion Collective Action Lawsuit

Mastercard can breathe a sigh of relief as the £14 billion (US$18.15 billion) lawsuit—a collective action over card charges that were passed on to shoppers—has been stopped by the U.K.’s Competition Appeals Tribunal, Paybefore sister publication Banking Technology reports.

As reported last year, the massive lawsuit was headed by ex-financial services ombudsman Walter Merricks, who is using the U.K.’s Consumer Rights Act 2015 to file a collective damages claim involving 46 million claimants.

The claim is that Mastercard unlawfully imposed high interchange fees—charged to stores when shoppers swipe their debit or credit cards—from 1992 to 2008. These charges were then passed on to consumers via inflated prices for goods and services, according to the suit.

The European Court of Justice said in 2014 that such fees were a violation of EU antitrust rules.

Last year, Mastercard contacted Banking Technology about the issue and raised a number of points to counter the claims. This includes that “these types of cases have been unsuccessful in the past. In the United States, class action lawyers have attempted to bring almost identical claims for damages supposedly suffered by consumers due to interchange.”

Today (21 July), on the Competition Appeals Tribunal website, for the case Walter Hugh Merricks CBE v Mastercard Incorporated and Others, the tribunal ruled that “the claims should not be certified under rule 79 of the Tribunal Rules as eligible for inclusion in collective proceedings.”

Rule 79 refers to the “Certification of the claims as eligible for inclusion in collective proceedings” and the Tribunal says it “may certify claims as eligible for inclusion in collective proceedings where, having regard to all the circumstances, it is satisfied by the proposed class representative that the claims sought to be included in the collective proceedings.”

In plain English, this means it’s been blocked.

Merricks says he is now considering whether to appeal.

In February, Mastercard did a victory dance when a U.K. High Court judge ruled in the payment card network’s favor regarding a lawsuit brought on by retailers disputing cross-border interchange fees on debit and credit cards.

In that lawsuit, retailers Asda Stores, Morrison Supermarkets and Next Retail, among others, accused Mastercard of overcharging stores when customers used credit and debit cards to pay. Retailers also claimed Mastercard’s interchange fees were anti-competitive and infringed on U.K. and EU law.

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