Court allows £14bn suit against Mastercard in UK's first consumer class action

WATCH: UK allows $18.5 bln case against Mastercard

The UK Supreme Court has allowed a $18.5bn (£14bn) class action suit against credit card firm, Mastercard (MA) to go ahead.

Mastercard is being accused of allegedly overcharging more than 46 million people in Britain over a 15-year period.

Britain’s highest court decision, which upholds last year’s Court of Appeal decision, paves the way for the country’s first mass consumer claim of its kind.

The court’s ruling means the case will now head for a second hearing at the Competition Appeal Tribunal (CAT) so a decision can be made on a Collective Proceedings Order.

If successful, almost every adult in the UK could receive a payout of up to £300 from Mastercard — even if they never had a Mastercard.

The company said it "disagrees fundamentally with the basis” of the claim and that it will ask the Competition Appeal Tribunal to “avert the serious risk of the new collective action regime going down the wrong path.”

"No UK consumers have asked for this claim. It is being driven by 'hit and hope' US lawyers, backed by organisations primarily focused on making money for themselves,” it said.

'Muenster, Germany - April 9, 2011: A close up macro shot of a Mastercard credit card. Mastercard is one of the biggest credit card companies in the world.'
If successful, almost every adult in the UK could receive a payout of up to £300 from Mastercard — even if they never had a Mastercard. Photo: Getty

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The legal action was initiated by former financial ombudsman — which handles consumer disputes with banks — Walter Merricks and claims that Mastercard charged UK consumers excessive transaction fees.

“Mastercard has been a sustained competition law breaker, imposing excessive card transaction charges over a prolonged period in a way it must have known would impose an invisible tax on UK consumers,” the lawyer said. He added that the prices of “everything we all bought from 1992 to 2008 were higher” than they should have been.

CAT threw out Merricks original suit. The Court of Appeal said the CAT had applied the wrong legal test in making its decision, a ruling now upheld in a majority decision by Supreme Court judges following a challenge by Mastercard.

The court has now set the benchmark which a new breed of mass consumer legal suit must meet in order to proceed to a trial where damages can be awarded. A host of class action are in the shadows awaiting the ruling of the case.

Consumer group Which? welcomed the ruling, calling it an “important win.”

Rocio Concha, director of policy and advocacy at Which?, said: "The Supreme Court's ruling will increase access to justice for consumers and set the standard for collective claims of this nature to proceed to trial.

"From today, the route to collective redress will be fairer, simpler and more attainable, and many cases that are currently on hold will be able to proceed to trial, ensuring victims of anti-competitive behaviour can get the justice they deserve."

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