Merricks v Mastercard: Clarifying Applicable Law and Limitation in Collective Competition Damage Claims: England and Wales Court of Appeal (Civil Division)

Introduction

In the landmark case Merricks v Mastercard Incorporated & Ors ([2024] EWCA Civ 759), the England and Wales Court of Appeal (Civil Division) addressed critical issues pertaining to the application of the Limitation Act 1980, Prescription and Limitation (Scotland) Act 1973, and the Competition Act 1998 (CA 1998) in the context of collective proceedings for damages arising from competition law infringements. Representing approximately 45 million UK consumers who used Mastercard between 1992 and 2008, Mr. Merricks sought to recover damages resulting from Mastercard's infringement of Article 101 TFEU related to cross-border EEA multilateral interchange fees (EEA MIFs).

Summary of the Judgment

The core of the judgment revolved around three preliminary issues:

Limitation/Prescription Issue: Whether claims based on transactions before specific dates were time-barred under the Limitation Act and CA 1998.
Applicable Law Issue: Determining which jurisdiction's law governs claims related to transactions with foreign merchants.
Exemptibility Issue: Whether Mastercard could present a counterfactual based on alternative exemptible EEA MIFs under Article 101(3) TFEU.

The Competition Appeal Tribunal (CAT) initially sided with Mastercard on the limitation issue but allowed Mastercard to appeal on the exemptibility matter. Upon review, the Court of Appeal dismissed the appeal on the applicable law issue and upheld the CAT's decision on the limitation, while also rejecting Mastercard's arguments concerning exemptibility.

Analysis

Precedents Cited

The judgment extensively referenced several key cases and statutory provisions:

DSG Retail Ltd v Mastercard [2019] CAT 5: Addressed transitional provisions of CAT Rules.
Deutsche Bahn AG v Mastercard Inc [2018] EWHC 412 (Ch): Explored the application of PILMPA 1995 in tort cases.
VTB Capital v Nutritek [2012] EWCA Civ 808: Clarified principles for applicable law under PILMPA 1995.
Johnson v Gore Wood [2000] UKHL 65: Discussed abuse of process in litigation.
Sainsbury's Supermarkets Ltd v MasterCard Inc [2018] EWCA Civ 1536: Examined exemption arguments under competition law.
Merricks v Mastercard [2020] UKSC 51: Supreme Court's stance on collective damages claims.

These precedents collectively influenced the Court's interpretation of the applicable law, limitation periods, and the boundaries of exemption under competition law.

Legal Reasoning

The Court's legal reasoning can be distilled into the following key areas:

1. Applicable Law in Collective Proceedings

The Court scrutinized the provisions of the Private International Law (Miscellaneous Provisions) Act 1995 (PILMPA 1995), particularly sections 11 and 12, to determine the governing law for tort claims in collective proceedings. The general rule under section 11(2)(c) focuses on the law of the country where the most significant elements of the tort occurred. However, in this case, the Court identified that the general rule should be displaced under section 12, given the unique nature of the claim as a follow-on collective action seeking aggregate damages for losses suffered by consumers.

The Court emphasized that the issues of causation and quantum of loss were the most significant in these proceedings, thereby necessitating the application of English or Scots law, respective to the residency of the class members. This decision aligns with the principle that the governance of legal issues should be closely tied to their substantive connection to the jurisdiction where the harm was experienced.

2. Limitation and Prescription

Addressing the limitation issue, the Court upheld the CAT's determination that claims based on transactions before June 1997 (English law) and before June 1998 (Scots law) were time-barred. The Court rejected Mr. Merricks' arguments that the omission of rule 31(4) in the 2015 CAT Rules effectively revived time-barred claims, citing Section 16(1) of the Interpretation Act 1978, which restricts the revival of rights unless explicitly intended by the legislature. Additionally, the Court noted that under Scots law, prescription extinguishes an obligation, making revival impossible.

3. Exemptibility under Article 101(3) TFEU

On the exemptibility issue, the Court concurred with the CAT's interpretation that Mastercard could not present alternative exemptible EEA MIFs as a counterfactual for damages assessment. This conclusion was based on the Commission's binding Decision, which found that Mastercard's EEA MIFs did not meet the exemption criteria under Article 101(3) TFEU. The Court highlighted that Mastercard did not engage in efforts to justify alternative levels of MIFs during the Commission's proceedings, thereby precluding them from attempting to introduce such arguments in the damage claims.

Impact

The judgment sets a significant precedent in several areas:

Determination of Applicable Law: Clarifies how PILMPA 1995 is to be applied in collective proceedings, emphasizing the focus on the substantive connection of the harm to the jurisdiction.
Limitation Periods: Reinforces the principle that legislative intent must be clear to revive time-barred claims, thereby upholding the integrity of limitation periods.
Exemptibility in Competition Law: Limits entities from retroactively challenging competition law infringements by introducing alternative justifications post-regulatory determinations.

These rulings will influence future collective actions and competition law cases, ensuring that procedural and substantive legal principles are consistently applied.

Complex Concepts Simplified

Private International Law (PILMPA 1995)

PILMPA 1995 governs the choice of applicable law in cross-border tort cases. Section 11 sets the general rule based on the most significant connection to the tort, while Section 12 allows for displacement of this rule under specific, exceptional circumstances.

Limitation Act 1980

The Limitation Act 1980 sets time limits within which legal claims must be brought. Once these periods lapse, claims are typically barred, meaning they cannot be pursued.

Article 101 TFEU

Article 101 of the Treaty on the Functioning of the European Union prohibits agreements that prevent, restrict, or distort competition within the EU's internal market. Article 101(3) provides exemptions if certain conditions are met.

Multilateral Interchange Fees (EEA MIFs)

EEA MIFs are fees charged by cardholders' issuing banks to merchants' acquiring banks for processing card transactions. Mastercard's setting of these fees was found to infringe competition law by establishing minimum prices and eliminating price uncertainty.

Conclusion

The Merricks v Mastercard judgment is a pivotal development in UK competition law, particularly in the realm of collective damage claims. By affirming that the applicable law in such proceedings should align with the jurisdiction where the harm is most significantly experienced, the Court ensures that legal determinations remain consistent and fair. The decision also upholds the sanctity of limitation periods, preventing the revival of time-barred claims unless expressly intended by legislation. Furthermore, by restricting the ability to retroactively argue exemptions under competition law infringements, the judgment fortifies the binding nature of regulatory decisions.

Overall, this case reinforces established legal principles while adapting to the complexities introduced by collective proceedings. It serves as a guidepost for future litigations, ensuring that both procedural integrity and substantive justice are maintained in the adjudication of competition law claims.

Merricks v Mastercard: Clarifying Applicable Law and Limitation in Collective Competition Damage Claims