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MasterCard has become the first big victim of new UK laws allowing US-style class actions, with litigation powerhouse Quinn Emanuel Urquhart & Sullivan bringing a £19bn claim against the financial services giant on behalf of British debit and credit card users hit with ‘illegal’ charges. 

The claim, the biggest in UK legal history, will be one of the first to be filed under the Consumer Rights Act 2015, which allows ‘opt-out’ claims to be brought for the first time in the UK. It was previously hard to bring consumer claims against corporates in the UK as each individual would have had to ‘opt-in’ to the claim.

Quinn Emanuel has estimated damage to UK consumers of £19bn over anticompetitive fees MasterCard charged British retailers to process card payments, which it alleges were passed onto customers through higher prices. If the claim is successful, every single UK consumer stands to be eligible for hundreds of pounds in compensation, unless they explicitly opt-out of the lawsuit.

MasterCard lost a decade-long legal battle over interchange card fees in 2014 when Europe’s top court, the Luxembourg-based European Court of Justice, ruled the company had breached competition rules by abusing its dominant market position with the charges. Because MasterCard’s fees have already been found to be illegal by the European Commission, this follow-on claim needs to only prove the damage consumers suffered as a result of MasterCard’s anticompetitive behaviour.

These US-style class actions require a representative, which in this case is former chief financial services ombudsman Walter Merricks.

Merricks said in a statement: ‘The prices of everything we all bought from 1992 to 2008 were higher than they should have been as a result of the unlawful conduct of MasterCard. There is no question that MasterCard acted illegally in the way it conducted its business, a business that affects all of us. All of us over-paid to the tune of up to £19bn during a period lasting 16 years. My aim is to get the redress to which UK consumers are entitled and to ensure that MasterCard cannot hold on to the illegal profits it made. This case should send a signal to companies that break competition laws at the expense of UK consumers that they do so at their financial peril.’

Quinn Emanuel, which has brought similar claims in the US, has been handed a £40m war chest by Chicago-based Gerchen Keller Capital, the world’s largest litigation funder, to bring the landmark class action. Gerchen Keller Capital will therefore take a slice of any potential damages.

Boris Bronfentrinker (pictured), a star hire by Quinn Emanuel in 2014 from London competition litigation boutique Hausfeld & Co, is the lead partner working on the claim. He is working alongside Kate Vernon, a recent addition from DLA Piper, and has instructed silks Paul Harris QC of Monckton Chambers and Marie Demetriou QC of Brick Court Chambers.

MasterCard has instructed Nick Cotter at Jones Day to defend the claim. Jones Day has been one of MasterCard’s to-go firms for its mounting pile of litigation over interchange fees. Supermarkets including Morrisons and Sainsbury’s, as well as department stores Debenhams and House of Fraser, have all brought claims against MasterCard over the charges. Tesco settled its claim against MasterCard last July for £39m.

Bronfentrinker added: ‘This is precisely the type of claim for which the new collective action regime was established. This is a landmark case where unlawful anticompetitive conduct has harmed UK consumers. That harm, likely to be in the hundreds of pounds is not large enough for any individual consumer to bring their own claim. But by aggregating the claims and bringing them on a collective basis, all UK consumers who lost out will get the compensation they are owed.’

tom.moore@legalease.co.uk