MasterCard Incorporated (NYSE: MA) was charged $18 billion for overcharging more than 45 million people in Britain over a 16-year period and was blocked by a British court on Friday. A newly empowered court called The Competition Appeal Tribunal (CAT) oversees Britain’s class action regime and ruled that they will not grant proceedings for the case to proceed to trial.
This case would’ve been the largest and most complex in British legal history and would have tested the limits of the new Consumer Rights Act. This act introduced opt out collective class actions for breaches of UK or European Union competition law in 2015.
In 2007, MasterCard lost a drawn-out appeal against the European Commission which claimed that their fees were anti-competitive. The fees charged on merchants’ banks covered the costs of operating card services, security, and innovation. However, the cost for retailers were passed on through increased prices of goods and services to all UK consumers including those who paid in cash and not just MasterCard holders.
Under the new collective action regime introduced by the Consumer Rights Act, UK based members of a defined group are automatically bound into legal action unless they opt out. This regime is designed to offer a more effective and economic route to compensation for UK based consumers and business to become a victim to anti-competitive conduct. In January, London’s High Court ruled that MasterCard had charged interchange fees at a lawful level without restricting competition with retailers.