On 21 July 2017, the UK's Competition Appeal Tribunal ("CAT") dismissed an application for certification of the second 'opt-out' collective proceedings to be brought in the UK.
By way of background, the subject of the contested collective proceeding concerns a damages claim which follows-on from the European Commission's decision in 2007 that MasterCard's multilateral interchange fees ("MIFs") applicable in the European Economic Area ("EEA") were in breach of Article 101 TFUE. In September 2014, that decision was definitively upheld by the Court of Justice of the European Union. For the purpose of UK law, this means that the Commission's decision is binding evidence of an EU competition law infringement. The collective proceedings in this case were brought on behalf of 46 million individuals in the UK suing Mastercard for approximately GBP 14 billion in damages.
However, under section 47B of the Consumer Rights Act (introduced in 2015), collective proceedings may only be brought before the CAT where it finds (and, accordingly, orders via a 'collective proceedings order') that the claim (a) is brought on behalf of an identifiable class of persons, (b) raises common issues, and (c) is suitable to be brought in collective proceedings. Central to the CAT's analysis in this case was whether the claim against MasterCard on behalf of a huge number of individuals raised "common issues" of the same, similar or related issues of fact or law, so as to be eligible to be brought before the CAT in the form of a collective proceeding.
In this regard, the CAT rejected the argument that "the individual claims [were] largely identical". Rather, the CAT identified six evidential issues which would arise in common on a claim against MasterCard by a member of the class. According to the CAT, three of these evidential issues raised concerns for lack of commonality, namely (i) the degree to which overcharges related to the MIFs were passed on to individuals in the class, (ii) the amount individuals in the class spent, and (iii) whether an individual using a credit card paid any interest to MasterCard and/or received any benefits in connection with the use of a particular MasterCard card.
Further, the CAT held that the claimants had not advanced a sustainable methodology which could be applied to calculate a sum to reflect an aggregate of individual claims for damages. The CAT cited the evidential test referred to by the Supreme Court of Canada in the 2013 Microsoft case which held that, when analysing expert evidence adduced in a collective claim form, the methodology to calculate the loss caused to the individuals in the class "must offer a realistic prospect of establishing loss on a class-wide basis". Moreover, the CAT did not consider that there was a reasonable and practicable means for distributing any award among the (vast) number of individuals in the claim.
The case is significant in the UK because it is only the second class action to date and because the GBP 14 billion claim is the largest follow-on damages claim yet filed. The CAT noted that the governing principle of damages for breach of competition law is restoration of the claimants to the position they would have been in but for the breach. This case confirms that failure to reasonably determine a claimant's loss in advance, even using broad estimated methods of calculation, will result in dismissal of a class action. Indeed, although the decision will likely mean that a vast number of individuals in the UK who suffered loss may not obtain compensation, it is noteworthy that the CAT acknowledged that this is effectively the position in most cases of widespread consumer loss resulting from competition law infringements.
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