In September 2016, former Financial Ombudsman Walter Merricks launched proceedings against Mastercard for losses suffered as a result of illegal card fees. It was the first mass consumer claim brought under the new collective action regime introduced as part of the Consumer Rights Act 2015.

MasterCard was found by the European Commission to have infringed EU law by imposing charges – known as interchange fees – on the use of MasterCard credit and debit cards which were accepted at more than half a million businesses in the UK. Merricks is seeking redress for UK consumers. His argument is that unsuspecting UK shoppers bore the brunt of ‘illegal’ credit card fees through higher prices of every day purchases whether they paid by cash or card. Mastercard’s fees were a significant cost for retailers that was then passed on to consumers through increased prices of goods and services.

MasterCard said it firmly disagreed with the basis of the claim.

In 2017, the CAT initially found in favour of Mastercard, refusing to allow the proceedings to be brought against the company. However, the Court of Appeal found in favour of Mr Merricks on all grounds of appeal. It said the Tribunal’s initial judgment contained errors of law and had misapplied the new legislative regime.

Merricks said: “I am very pleased with today’s decision. It is nearly 12 years since Mastercard was clearly told that they had broken the law by imposing excessive card transaction charges, damaging consumers over a prolonged period. As a result we all had to pay higher prices in the shops than we should have done – while Mastercard have pocketed the profits. Since then they have done nothing to apologise, let alone to pay back the money they wrongly caused us to pay out. When challenged, all they have done is to raise technical legal arguments that turn out to have no merit – as the Court of Appeal has shown today. It’s now time for Mastercard to admit the damage they did, to apologise to the British public, and to agree to pay the compensation they owe.

“I’m particularly pleased that the judges recognised that the CAT’s decision would have frustrated the will of Parliament when it passed the Consumer Rights Act – that there should be an effective route for consumers to be compensated when businesses break competition law.”

However, the new ruling does not mean that consumers will get their compensation, simply that proceedings can now be brought against Mastercard. Boris Bronfentrinker, the Quinn Emanuel Urquhart & Sullivan partner representing Merricks, said: “This is a satisfying victory, but the focus now shifts to securing compensation for the 46 million UK consumers who lost out as a result of Mastercard’s action.”