Mastercard Facing £14 Billion UK Class Action Suit

A U.K. high court class action lawsuit brought by 46 million consumers could cost Mastercard £14 billion now that a court decision has allowed the case to go forward, the Financial Times reported on Friday (Dec. 11).

Following a landmark ruling by the Supreme Court, former financial ombudsman Walter Merricks can now bring a suit against Mastercard on behalf of millions of U.K. citizens in Britain’s largest class action case to date.

Merricks alleges Mastercard is in violation of the European Union’s competition law because of the “interchange” fees charged to retailers for card use. The fees are usually passed on to the consumer via higher prices. 

The case is the first major lawsuit to move forward under the Consumer Rights Act 2015, which penalizes anti-competitive behavior. The case stems from an European Commission (EC) ruling in 2007 that said Mastercard interchange fees were in breach of competition law. 

The £14 billion (roughly $18.5 billion) lawsuit is being brought on behalf of anyone 16 and older who made purchases using Mastercard. If Merrick wins the lawsuit, each customer would receive roughly £300. 

“The Supreme Court’s decision means that claims relating to losses affected by anti-competitive business wrongdoing in other sectors can be pursued,” he told FT. “Today’s judgment sends a powerful signal to companies that infringe competition law that they do so at their financial peril.”  

Rocio Concha, director of policy and advocacy at consumer organization Which? called the decision a “hugely important win for consumers,” but Mastercard said it “fundamentally disagreed” with the case.

“No UK consumers have asked for this claim,” Mastercard said, per FT. “It is being driven by ‘hit and hope’ U.S. lawyers, backed by organizations primarily focused on making money for themselves.” 

Mastercard and Visa lost a legal battle in June over swipe fees. The high court in the U.K. upheld a 2018 ruling that both card companies stifled retail competition with transaction fees known as multilateral interchange fees (MIF). 

The case dates back to 2016, when Sainsbury and other retailers filed suit against Visa and Mastercard over credit and debit card fees. The U.K.’s Competition Appeal Tribunal (CAT) denied Mastercard’s appeal.

The Supreme Court ruling has been seized on by lawyers who suggested it would lead to a rising number of class action court cases, some of which had been on hold awaiting the decision.