On 8 March 2024, the Court of Appeal refused applications by Mastercard and Visa for permission to appeal a decision by the Competition Appeal Tribunal (“CAT”) in CICC, [1] confirming that business claims may proceed under the collective proceedings regime rather than as individual claims.

Background

In its judgment of 8 June 2023 in CICC, the CAT refused to certify an application by CICC I and CICC II, the proposed class representatives, (the “PCR”) which seek to bring collective proceedings on behalf of merchants against Mastercard and Visa alleging that certain multilateral interchange fees applied in payment schemes infringed competition law causing financial losses to the merchants.

Certification was refused by the CAT on the basis that the applications were insufficiently focused and the PCR had not advanced a sufficient methodology or analysis on key issues to allow the CAT properly to assess whether the applications were suitable for collective proceedings.  However, it considered that the members of the class might in fact have a claim which was generally well suited to collective proceedings, rather than individual claims, and gave the PCR an opportunity to present revised proposals in order to remedy the defects.  Mastercard and Visa sought to appeal, arguing that the CAT erred in law by holding that individual claims were not more suitable than collective claims.

Mastercard and Visa’s Arguments

The PCR proposed opt-in proceedings for merchants with a turnover of more than £100m and opt-out proceedings for smaller merchants.  Mastercard and Visa argued that the size and sophistication of the class members as well as the value of individual claims was highly relevant to the question of whether collective proceedings were more suitable than individual claims.  They argued that the opt-in class comprised large undertakings and that many of them had substantial claims including around 70 with a claim of at least £3.65 million.  This together with the existence of prior claims that were litigated and settled, demonstrated that individual claims were realistic and viable.  In relation to the opt-out class, which comprised smaller merchants, Mastercard and Visa argued that the ongoing MIF Umbrella Proceedings demonstrates that it is practicable for smaller class members to sue in their own names, in particular by joining the claims of other larger merchants.  Further, they submitted that certification would deprive opt-out class members of their individual freedom of choice to sue and settle in their own right, rather than being corralled into group litigation.

Decision

The Court of Appeal refused permission to appeal.  It concluded that the CAT had acted within its legitimate discretion, and made four observations about the breadth of discretion to be accorded to the CAT in matters of case management:

1. The CAT’s case management decisions are exercises in pragmatism and the CAT has an increasing well of experience in the weighing up exercise relevant to the choice between opt-in and opt-out proceedings. The Court of Appeal will not interfere simply because it might have drawn a different conclusion from the weighing exercise.
2. The statutory test for certification requires the CAT to form its own view on the factors relevant to suitability. It is not required to explore every argument raised by the parties.
3. There is inherent uncertainty in case management decisions of this sort, which require the CAT to “crystal ball gaze” and consider how the litigation will unfold. The CAT is required to use its judgement and experience to take the best decisions that it can based upon the information available to it. It is not a valid criticism to point to alternative solutions and contend that they “would” be preferable.
4. The statutory test does not attach greater or lesser weight to any particular consideration in the suitability exercise: “For example, it is not the case that because individual natural or legal persons could bring individual proceedings, this is dispositive against collective proceedings”.

The Court concluded that the core matters relevant to the CAT’s discretion are “the procedural benefits and disbenefits of different types of proceedings; the ease with which proposed class members, or subsets thereof, could commence individual proceedings; costs; and the ease and ability of the Tribunal, in the future, to manage and administer the litigation.” The Court reiterated that “this was a judgment by a Tribunal whose task is to handle and administer exceedingly complex litigation raising novel and knotty problems about which the Tribunal has a growing and highly specialised body of experience. This Court will be very slow to interfere with this sort of evaluation”.  In this case, the Court was clear that the CAT acted within its legitimate discretion.

In considering the arguments put forward by Mastercard and Visa, the Court considered that the real motivation in seeking permission to challenge the CAT’s decision was likely to be that Mastercard and Visa considered that individual proceedings would be more difficult to mount and therefore fewer claims would be brought against them.  However, this conclusion “tends to support, not undermine, the analysis of the CAT which pointed out that collective proceedings were a better way of vindicating the claims of the affected merchant class, than individual claims”.

Impact

The Court’s judgment is a clear statement of support for the CAT’s broad case management powers, confirming that there is relatively limited scope for case management decisions to be challenged on appeal.  It is also an important endorsement of the collective action regime as suitable for claims by businesses.

Authors: David Lawne and Jamie Nicolaides

Footnotes

[1]Visa Inc and Others v Commercial and Interregional Card Claims I Limited & Commercial and Interregional Card Claims II Limited; and Mastercard Incorporated and Others v  Commercial and Interregional Card Claims I Limited & Commercial and Interregional Card Claims II Limited; [2024] EWCA Civ 218.