Competition Appeal Tribunal refuses permission to appeal on certification in the collective action against Mastercard
Published on 24th Oct 2017
As we reported in July, perhaps unsurprisingly, the Competition Appeal Tribunal (CAT) refused to certify a “collective action” claim by Walter Merricks against Mastercard on behalf of 46 million UK consumers. Mr Merricks’ application for permission to appeal against that decision has now also been rejected – you can read the full judgment here. What does this mean for this claim and for collective actions?
The basis of the appeal
The determining issue in this decision was whether any right of appeal even existed. The CAT examined the statutory basis for bringing an appeal which Mr Merricks had relied on (section 49 of the Competition Act 1998) and concluded that it did not cover an appeal against the granting (or non-granting) of a collective proceedings order (CPO). The key factor was that the refusal to certify the claim as a collective action was not a rejection of the substantive claims per se, but was a procedural decision about how the claims could be brought.
The CAT pointed out that the claim could still be brought in a different form, such as a series of collective claims for sub-classes, or using a different process.
Having reached the conclusion that there was no statutory right of appeal (or to seek permission to appeal), the CAT could have left the matter there, but helpfully it also went on to confirm the grounds on which it had originally made its decision not to certify.
Merits of the grounds for appeal
In summary, Mr Merricks first argued that the CAT had refused the CPO on the basis that “there [was] insufficient data available to determine the extent to which the [overcharge] was passed on to members of the proposed class“, which was an error of law. He claimed he should have been permitted to rectify the lack of data. The CAT disagreed that this was the question it had considered. In its latest judgment, it held that the actual question that it had considered was “whether the conditions for treating pass-on as a common issue to be determined for all claims collectively were satisfied” (paragraph 18). It had found that the wide variation in the retailers involved in the card purchases meant that pass-on could not be considered a “common issue”, so the condition was not satisfied.
Secondly Mr Merricks argued that the Tribunal’s refusal to certify the claims as a collective action because – as he characterised it – individuals’ damages could not be accurately calculated on a compensatory basis, was at odds with the very purpose of the collective actions (and damages) regime and an error of law. Again, the CAT disagreed with this characterisation of the grounds on which it had reached its decision. Rather, it had concluded that the claimant had failed to present any method of distributing damages which was even approximately compensatory and had not suggested that this was even possible. Therefore this further suggested the claim was not suitable for a CPO.
The future of the Merricks v Mastercard claim
On the basis of this latest decision, that there is no statutory mechanism to appeal a certification decision, Mr Merricks is left only with the possibility of seeking to challenge the decision in a judicial review. Although this lack of an appeal route may at first glance seem odd, the CAT pointed out that the absence of an appeal mechanism for the certification process was deliberate, and in part designed to protect claimants from lengthy and expensive challenges by defendants facing a certified CPO.
It remains to be seen whether any further challenge is brought by way of judicial review (for which time is short), or whether the claim is “repackaged” to address the barriers to certification identified by the CAT. However, the threshold for succeeding in a judicial review action is high and so, ultimately, it seems unlikely that the certification decision will be overturned.
The future of collective actions
The CAT appears to have been keen to emphasise that it is not averse to large collective claims, provided they were coherently formulated and genuinely faced common issues. As we have previously noted, whilst Mr Merricks had encouraged the CAT to take “a broad axe” in judging his application, it is clear that the CAT is looking more for scalpel-like precision. The rejection of the appeal does not change our view that properly defined classes and well-prepared applications should be able to secure certification.