Historically, class actions have primarily been related to the United States. With the exception of Canada, Australia and a few others, most countries in the world have not adopted this legal collection mechanism as freely and frequently. Class actions are still the most prevalent in the United States and can resolve various disputes regarding antitrust violations, data breaches, product liability, and more. However, the globalization of class actions is growing as more and more countries continue to allow such proceedings. The UK has recently seen a movement in this area, which could allow many more consumers to participate in various class actions.
Prior to the passage of the Consumer Rights Act (CRA) in October 2015, the UK did not really have an established mechanism for individuals to file a class action lawsuit (referred to in the UK as ‘class actions’) . While group litigation allowed opt-in mass claims, opt-out claims were not allowed. The adoption of the CRA now provides a way to pursue non-participation class actions related to the private enforcement of competition claims. There are a few key differences between competition class action lawsuits in the US and UK, namely requiring the proposed UK group representatives to prepare a plan outlining methods for informing those represented on the progress of the dispute. procedure, and process the notification before a complaint is fully argued or settled. .
Over the past six years, a number of class actions for non-participation in competition have been filed in the UK, but no substantive cases have made it through the very early stages of the proceedings until August, when the Competition Appeal Tribunal (CAT) finally certified Walter Hugh Merricks CBE v. MasterCard Incorporated and others  CAT 16. This paved the way for further certification procedure orders to be issued.
Movement on the MasterCard case
In 2016, Merricks filed an application with the CAT for a bankruptcy order in a case against MasterCard. The class action is said to be based on the fact that MasterCard previously imposed multilateral interchange fees on card purchases, which the European Commission has already determined to be a violation of UK competition law. Approximately 46 million consumers would constitute the category of complainants. The CAT initially refused to grant an order authorizing the continuation of the class action, concluding that the payment of damages would be difficult to calculate and would fail to compensate the plaintiffs.
The Supreme Court ultimately overturned the dismissal of this action in December 2020, ruling that certification should be allowed where such claims are better suited as bankruptcy proceedings as opposed to individual filings, and the CAT should not consider the property. -supported claim at this early stage. Additionally, the Supreme Court ruled that damage being difficult to determine is not a valid reason for denying certification when a proposed class will be able to establish damage, which is especially true here since the European Commission has already acknowledged a violation. This decision puts the file back into circulation and establishes a more concrete test to certify class actions.
On August 18, 2021, the CAT finally accepted the proposed lead plaintiff and ruled that the class action valued at Â£ 14 billion could continue. What is happening with this case is extremely important in the development of UK class action law. Following the 2020 Supreme Court ruling, five more requests for a collective procedure order were already heard and awaiting decisions. Now, the CAT is also expected to begin hearings on these and other claims that have remained in limbo.
The UK has long resisted the adoption of the collective redress mechanism the US has had for over 50 years – often citing fears of creating an overly contentious company. Regardless of the past, insolvency proceedings are now permitted for competition and Merricks vs. MasterCard paved the way for the certification of other actions with the same merit. Subsequently, it is likely that more extensive opt-out procedures will be approved in the years to come. The importance of Merricks decision is not only for the courts and legal professionals, but also for consumers and small businesses who may now have a mechanism to receive compensation.
Practitioners in this space would be wise to monitor new developments in this area. We have already seen a flurry of new filings and look forward to more to come once new bankruptcy orders are issued. While this may initially be overwhelming for the Tribunal and create a backlog, once things are settled and other decisions are final, the process should become more routine. Since this is a developing area of ââlaw in the UK, it will take time and guidance to create new standards and provide a better sense of predictability. As such, it is important to keep a close eye on how the CAT applies the Supreme Court’s certification guidelines to future applications, as this will provide more information on which applications are worth filing. . Also check to see if any other unique issues regarding certification, merit testing, damages, or notice proceedings are taken to higher courts in the future. While it may take some time to establish new tests and standards specific to class actions, the initial hearing process will likely be expedited now that the first case has crossed the threshold.
Consumers now have a way to unite when a serious breach of competition is presumed to have taken place – and consumers can now potentially be compensated for the harm as these cases are resolved through settlement or settlement. a trial. Conversely, it also means that companies now have more potential liability at stake and must ensure that their policies and practices are structured in such a way as to limit future risks. Organizations must proactively anticipate a competitive collective action trend to avoid heavy penalties and damaged reputation, which will affect all global operations. Strategic actions to take include monitoring legal updates in this space, consulting with legal counsel to confirm policies and practices are legal, making any necessary changes after completing internal reviews, and creating training programs to promote compliance with UK competition laws. While these safeguards should already be implemented, now is the time to audit the processes, as the threat of large-scale collective actions is no longer a reality.
For more information on class actions in the UK, please click here.