Walter Hugh Merricks CBE v Mastercard Incorporated

Hearing dates: 1 to 3 May 2024

Approved Judgment

This judgment was handed down remotely at 10.30am on Friday 5 July 2024 by circulation to the parties or their representatives by e-mail and by release to the National Archives

Introduction

These appeals concern three preliminary issues decided by the Competition Appeal Tribunal (“CAT”) in its judgment handed down on 21 March 2023 in the collective proceedings brought by Mr Merricks as Class Representative on behalf of some 45 million consumers who were resident in the UK between 1992 and 2008 and who, in that period, purchased goods and services from businesses selling in the UK that accepted Mastercard cards.

The present proceedings are follow-on claims for damages alleged to arise by reason of the infringement found by the European Commission (“the Commission”) in a Decision on 19 December 2007 (“the Decision”) which found that Mastercard had infringed Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) based on the rules and decisions of Mastercard concerning cross-border EEA multilateral interchange fees (“EEA MIFs”) to be charged by cardholders' issuing banks to merchants' acquiring banks. Appeals by Mastercard against the Decision to the General Court and subsequently the Court of Justice of the EU (“CJEU”) were dismissed.

The essence of the claim in these proceedings, in respect of which a Collective Proceedings Order (“CPO”) was made by the CAT on 18 May 2022, is that the EEA MIFs the subject of the Decision were causative of the domestic MIFs set by Mastercard, that the MIFs were passed through by acquiring banks in the charges they levied on merchants for processing card transactions (the merchant service charge or “MSC”) and that the merchants passed through the MSC in whole or in part in the prices charged to their customers in the UK.

There are three preliminary issues on appeal:

(1) Whether the application of the Limitation Act 1980 (and the Prescription and Limitation (Scotland) Act 1973) have been precluded by the Competition Act 1998 (“CA 1998”) and the CAT Rules. The CAT found in favour of Mastercard that claims governed by English law, in so far as they are based on transactions prior to 20 June 1997 are time-barred and claims governed by Scots law in so far as they are based on transactions prior to 20 June 1998 are time-barred (“the limitation/prescription issue”).

(2) For the purposes of limitation or prescription, which law governs the claims in relation to transactions with foreign merchants. The CAT found that English and Scots law respectively governed such transactions (“the applicable law issue”).

(3) Whether, as a matter of law, Mastercard is entitled to advance a counterfactual based on an alternative exemptible EEA MIF pursuant to Article 101(3) of the TFEU. The CAT found that Mastercard was not entitled to advance such a counterfactual by reason of the binding effect of the Decision, alternatively, that to do so would be an abuse of process (“the exemptibility issue”).

On 10 August 2023, Green LJ granted Mastercard permission to appeal in relation to the exemptibility issue on the basis that it was both arguable and of legal importance. In relation to both Mastercard's application for permission to appeal on the applicable law issue and Mr Merricks' application for permission to appeal on the limitation/prescription issue, Green LJ considered that prima facie the reasoning of the CAT was persuasive, but that the issues of law were important and with ramifications for other cases. Accordingly, he deferred both applications for permission to appeal to an oral hearing to be heard at the same time as the appeal on the exemptibility issue, on a rolled-up basis. We conducted the appeal and the rolled-up hearing over three days on 1 to 3 May 2024.

The judgment of the CAT

In relation to limitation, the CAT noted at [11] that the relevant period for the claims starts on 22 May 1992 and that Mastercard contends that, by virtue of the respective law on limitation or prescription at the time that the original section 47A CA 1998 and the 2003 CAT Rules came into force, claims governed by English law, in so far as they are based on transactions prior to 20 June 1997 are time-barred and claims governed by Scots law in so far as they are based on transactions prior to 20 June 1998 are time-barred. Mr Merricks contends that all the claims are in time on the basis of section 47A CA 1998 and rule 31(1)-(3) of the 2003 CAT Rules, applied by reason of rule 119(2) of the 2015 CAT Rules.

The CAT noted that, to explain the parties' contrasting positions, it was necessary to revisit the vexed question of the transitional provisions of the CAT Rules. These had been considered in detail by the CAT in DSG Retail Ltd v Mastercard [2019] CAT 5 and by the Court of Appeal in that case, largely reversing the CAT ( [2020] EWCA Civ 671). The CAT in this case then set out an outline of the legislative framework derived from the CAT judgment in DSG which was adopted by the Court of Appeal.

The CAT pointed out that, prior to 2003, a private action claiming damages for breach of competition law could be brought only in the civil courts. The Enterprise Act 2002 (“EA 2002”) introduced s.47A into the CA 1998 with effect from 20 June 2003, which governed claims that may be brought before the CAT. At [16] of the judgment the CAT said that the result was that:

“the Tribunal's jurisdiction in damages claims was (i) confined to follow-on damages; (ii) could not be invoked before the relevant authority had taken a decision that the relevant prohibition had been infringed…; and (iii) if the infringement decision was under appeal, could be invoked before the determination of that appeal only with the permission of the Tribunal. The jurisdiction was subject to a new, special time-limit set out in rule 31 of the 2003 Rules.”

The CAT noted at [19] that the jurisdictional landscape changed dramatically with the coming into force of the Consumer Rights Act 2015 (“CRA 2015”), which introduced a new section 47A CA 1998, together with section 47B which introduced the regime for collective proceedings. As the CAT said at [21] this meant that since 1 October 2015:

“the Tribunal has had full jurisdiction for competition damages claims, whether follow-on or stand-alone, that is parallel to the jurisdiction of the courts. And in addition, the Tribunal has exclusive jurisdiction for collective proceedings”.

At [22] to [25] the CAT made reference to the new section 47E CA 1998, introduced by the CRA 2015, providing that, subject only to certain special provisions, proceedings before the CAT were subject to the same provisions regarding limitation and prescription as in the civil courts. However, although the new section 47A applies to claims whenever arising, the new s.47E on limitation applied only to claims arising after 1 October 2015: CRA 2015, Sch 8, paras 4(2) and 8(2). Moreover, section 47E has itself now been repealed by regulation 3 of the Claims in respect of Loss or Damage arising from Competition Infringements (Competition Act 1998 and Other Enactments (Amendment)) Regulations 2017 (SI 2017/385) (the “2017 Regulations”). The 2017 Regulations introduced Sch 8A into the CA 1998 with new limitation and prescriptive periods, but this only applies, and the repeal of section 47E only takes effect, as regards claims relating to loss or damage suffered after 9 March 2017: Sch 8A, para 42 and Sch 2, para 5(2) of the 2017 Regulations. Accordingly, as the CAT concluded at [25]: “neither s. 47E nor Part 5 of Sch 8A apply to the present proceedings.”

The CAT then referred to the CAT Rules, noting that both the 2003 and the 2015 Rules were made pursuant to section 15 and Sch 4 of EA 2002. At [27] the CAT set out rule 31 of the 2003 Rules which dealt with the time limit for making a claim for damages:

“31(1) A claim for damages must be made within a period of two years beginning with the relevant date.

(2) The relevant date for the purposes of paragraph (1) is the later of the following—

(a) the end of the period specified in section 47A( 7) or (8) of the 1998 Act in relation to the decision on the basis of which the claim is made;

(b) the date on which the cause of action accrued.

(3) The Tribunal may give its permission for a claim to be made before the end of the period referred to in paragraph (2)(a) after taking into account any observations of a proposed defendant.

(4) No claim for damages may be made if, were the claim to be made in proceedings brought before a court, the claimant would be prevented from bringing the proceedings by reason of a limitation period having expired before the commencement of section 47A.”

At [28], the CAT noted that the 2015 Rules came into effect on 1 October 2015, corresponding to the new provisions of CA 1998 introduced by CRA 2015, including the collective proceedings regime. The 2003 Rules were revoked by rule 118, and there were no substitute provisions for the old rule 31: limitation and prescription were to be...