Judgment of the Tribunal regarding four applications for collective proceedings orders (“CPOs”) under s.47B of the Competition Act 1998 (“CA 1998”) by two Proposed Class Representatives, Commercial and Interregional Card Claims I Limited and Commercial and Interregional Card Claims II Limited (“CICC I” and “CICC II” respectively or, together, “the PCRs”) to combine standalone claims for damages caused by the Proposed Defendants’ alleged breaches of statutory duty in infringing Chapter I of CA 1998 and/or Article 101 of the Treaty on the Functioning of the European Union by reason of the way in which commercial and interregional multilateral interchange fees (“MIFs”) have been set in the Proposed Defendants’ respective card schemes.
CICC I seeks two CPOs, each against the Mastercard and Visa Proposed Defendants, on an opt in basis on behalf of a class of merchants with average annual turnover of £100 million or more per annum in the period 2016-2019 who have paid a merchant service charge (“MSC”) in respect of interregional and/or commercial card transactions which took place (a) in the EU (including the UK) after 1 June 2016 and prior to 1 January 2021 or (b) in the UK on or after 1 January 2021.
CICC II seeks two CPOs, each against the Mastercard and Visa Proposed Defendants, on an opt out basis on behalf of a class of merchants with average annual turnover of less than £100 million per annum in the period 2016-2019 who have paid a MSC in respect of interregional and/or commercial card transactions which took place in the UK after 1 June 2016.
The Mastercard and Visa Proposed Defendants opposed the granting of the CPOs on the grounds of eligibility, authorisation and methodology.
- Methodology – the Proposed Defendants contended that significant elements of the PCRs’ cases contain no information at all about the methodology for important aspects, such as the issues of infringement, acquirer pass on and merchant pass on.
- Eligibility – the Proposed Defendants submitted that:
- there are real difficulties in determining whether a merchant is or is not a member of the proposed classes in the opt in and opt out proposed collective proceedings;
- in respect of both types of proposed collective proceedings, the lack of methodology makes it impossible to identify the extent and nature of common issues or to determine the most appropriate way of dealing with them; and
- in light of the existence of the Merchant Interchange Fee Umbrella Proceedings (Case No. 1517/11/7/22 (UM)) and its features, the cost and benefit analysis weighs against the proposed collective proceedings and individual proceedings are in fact a more appropriate means of redress.
- Authorisation – the Proposed Defendants raised questions about the experience and control of the PCRs’ sole director in respect of the proposed collective proceedings.
For the reasons given in the judgment, the Tribunal unanimously concluded that all four proposed collective proceedings do not meet the requirements set out in the CA 1998, the Competition Appeal Tribunal Rules 2015 and the case law, and it was unable to grant any of the applications for CPOs. In particular:
- The Tribunal was unable to grant the CPO applications for the proposed opt out proceedings in their current forms due to a defect in relation to the identification of the class, the absence of methodology for infringement and its counterfactual, and concerns about the practicality and proportionality of the methodology advanced for resolving acquirer and merchant pass on issues.
- The Tribunal was unable to grant the CPO applications for the proposed opt in proceedings in their current forms due to issues which flow from the class definition and there being no adequate methodology for infringement and its counterfactual.
The Tribunal stayed all four CPO applications and granted the PCRs a period of eight weeks from the date of the Tribunal’s judgment to notify the Tribunal and the Proposed Defendants of any intention to present revised proposals for any of the proposed collective proceedings.
