Merricks v Mastercard Incorporated & Ors

Factual and Procedural Background

These appeals arise from three preliminary issues decided by the Competition Appeal Tribunal ("CAT") in its judgment dated 21 March 2023 concerning collective proceedings brought by Plaintiff as Class Representative on behalf of approximately 45 million consumers resident in the UK between 1992 and 2008 who purchased goods and services from merchants accepting Mastercard cards. The claims are follow-on damages actions based on an infringement decision issued by the European Commission ("the Commission") on 19 December 2007, which found that Mastercard infringed Article 101 of the Treaty on the Functioning of the European Union ("TFEU") by setting cross-border EEA multilateral interchange fees ("EEA MIFs"). Mastercard’s appeals against that Decision to the General Court and the Court of Justice of the EU were dismissed.

The core claim is that the EEA MIFs caused domestic MIFs set by Mastercard, which were passed on by acquiring banks to merchants via merchant service charges ("MSC") and subsequently passed on to consumers in the UK. The CAT made a Collective Proceedings Order on 18 May 2022. The three preliminary issues on appeal concern: (1) the application of limitation and prescription laws versus the Competition Act 1998 and CAT Rules ("limitation/prescription issue"); (2) the governing law for claims involving transactions with foreign merchants ("applicable law issue"); and (3) whether Mastercard can rely on a counterfactual involving alternative exemptible EEA MIFs under Article 101(3) TFEU ("exemptibility issue").

Permission to appeal was granted by Green LJ on the exemptibility issue, and the applicable law and limitation/prescription issues were heard together with the exemptibility issue in May 2024. The CAT’s judgment addressed complex interactions between various legislative provisions, CAT Rules, and prior case law regarding limitation periods, choice of law, and the binding effect of the Commission’s Decision.

Legal Issues Presented

1. Whether the application of the Limitation Act 1980 and the Prescription and Limitation (Scotland) Act 1973 is precluded by the Competition Act 1998 and the CAT Rules in relation to claims arising before certain dates.
2. Which law governs claims relating to transactions with foreign merchants for limitation or prescription purposes.
3. Whether Mastercard is entitled to advance a counterfactual based on alternative exemptible EEA MIFs pursuant to Article 101(3) TFEU, or whether such an argument is precluded by the binding effect of the Commission’s Decision or constitutes an abuse of process.

Arguments of the Parties

Appellant's Arguments (Mastercard)

• On the applicable law issue, the CAT erred in concluding that English or Scots law applied based on the place where consumers suffered loss; the applicable law should be that of the place where the restriction of competition occurred (i.e., where the merchant's acquiring bank was located).
• The CAT wrongly displaced the general rule under section 11(2)(c) of the Private International Law (Miscellaneous Provisions) Act 1995 ("PILMPA 1995") with section 12.
• The CAT erred in its application of the common law double actionability rule by finding no single jurisdiction where the tort was committed.
• On the exemptibility issue, Mastercard contended it should be able to argue at trial that alternative levels of EEA MIFs could have met exemption criteria under Article 101(3), relying on the Commission’s recital (13) and subsequent developments where lower MIFs were accepted.
• On limitation, Mastercard argued that accrued limitation rights should not be abrogated and that the CAT erred in its interpretation of the CAT Rules and statutory provisions.
• On abuse of process, Mastercard contended that the present case did not fall within established categories of abuse and that it was entitled to litigate the exemption issue.

Appellee's Arguments (Plaintiff)

• The applicable law should be English or Scots law as the place where the loss was suffered, given the collective nature of the proceedings and the definitive finding of restriction of competition by the Commission.
• The CAT correctly applied the displacement test under section 12 of PILMPA 1995 to focus on the issues arising in the proceedings, which relate primarily to causation and quantum of loss in the UK jurisdictions.
• The collective proceedings regime is not merely procedural but substantively alters the nature of claims, enabling aggregate damages based on the collective loss suffered by UK consumers.
• The limitation period regime under the CAT Rules creates a bespoke two-year limitation period, replacing the Limitation Act 1980 for relevant claims, and omission of rule 31(4) was deliberate, not reviving stale claims.
• The Commission’s Decision was a broad finding that Mastercard’s EEA MIFs were not exemptible; Mastercard cannot argue alternative exemptible MIF levels not advanced before the Commission.
• Allowing Mastercard to advance such a counterfactual would amount to an abuse of process, undermining finality and the administration of justice.

Table of Precedents Cited

Court's Reasoning and Analysis

The Court analyzed the three issues in turn, applying relevant statutory provisions, CAT Rules, and case law.

Applicable Law: The Court emphasized that under section 11(2)(c) of PILMPA 1995, the applicable law is determined by identifying the elements of the tort and assessing the intrinsic nature and location of those elements at the time the tort was committed. The Court rejected the CAT's approach of assessing significance based on the issues in the proceedings years later, which could lead to a "floating" applicable law. However, the Court found that section 12 of PILMPA 1995, which allows displacement of the general rule if substantially more appropriate, applies here due to the definitive Commission Decision and the collective nature of the proceedings seeking aggregate damages. The Court held that it was substantially more appropriate for the governing law to be English or Scots law, where the loss was suffered and the class members reside. The Court also upheld the CAT’s application of the exception to the common law double actionability rule for limitation/prescription issues, given the complexity and multi-jurisdictional nature of the tort elements.

Limitation/Prescription: The Court found the CAT's dismissal of Plaintiff’s arguments correct. It was inherently unlikely Parliament intended that claims time-barred before 20 June 2003 would be revived by the 2015 CAT Rules. The Court applied the principle from Yew Bon Tew that accrued limitation rights are preserved unless the contrary intention is unavoidable, which it was not here. The Court rejected the argument that section 47A(4) CA 1998 replaced the Limitation Act 1980 with a bespoke two-year regime, holding that the provision identifies claims that may be brought but does not exclude limitation defenses. The Court further held that the omission of rule 31(4) from the 2015 Rules was deliberate but did not abrogate accrued limitation rights. The Court noted particular difficulties with Scots law of prescription, which extinguishes claims, and found no basis for reviving such claims.

Exemptibility: The Court construed the Commission’s Decision as a broad finding that Mastercard’s EEA MIFs were not exemptible in any form, rather than a finding limited to the particular levels notified. Mastercard chose not to seek exemption for any alternative or lower MIF levels before the Commission, relying instead on economic theory. The Decision required Mastercard to dismantle its entire EEA MIF structure. The Court rejected Mastercard’s argument that it could advance a counterfactual of alternative exemptible MIFs, finding that such an argument would narrow the scope of the binding Decision impermissibly. The Court noted that recital (13) of the Decision was prospective, allowing Mastercard to seek exemption for future MIFs based on empirical evidence, which it did in 2009. The Court did not decide the abuse of process argument but acknowledged the CAT’s view that permitting Mastercard to advance the alternative MIF argument would bring the administration of justice into disrepute.

Holding and Implications

The Court delivered the following decisions:

(1) Permission to appeal on the applicable law issue is granted, but the appeal is DISMISSED. The applicable law for limitation and prescription purposes is English or Scots law, the law of the place where the loss was suffered and where the class members reside, rather than the law of the place where the restriction of competition occurred.

(2) Permission to appeal on the limitation/prescription issue is refused. The Court upheld the CAT’s conclusion that accrued limitation rights prior to 20 June 2003 are preserved and not abrogated by subsequent legislation or CAT Rules.

(3) Mastercard’s appeal on the exemptibility issue is DISMISSED. Mastercard is precluded from advancing a counterfactual based on alternative exemptible EEA MIFs for the relevant period because the Commission’s Decision is binding and covers the entire MIF structure. The Court left open the abuse of process question but indicated strong support for the CAT’s view that permitting such a defense would be abusive.

The direct effect is that the collective proceedings will proceed under English or Scots law limitation regimes, and damages will be assessed on the basis of a counterfactual of no EEA MIFs, consistent with the Commission’s Decision. No new precedent altering limitation rights or the binding effect of Commission Decisions was established.