A £200 million settlement in the collective action between MasterCard and Walter Merricks, which represented 44 million UK customers, was granted by the Competition Appeal Tribunal (CAT) on Friday, February 21. A negligence admission was not made in the settlement of the dispute, which claimed that Mastercard interchange fees violated EU competition law.
Walter Merricks, the man behind the lawsuit, came to an agreement in December to end the years-long legal battle. Innsworth Advisors, the lawsuit funder, contested the settlement, arguing that it minimized the claim’s value. The case’s initial value was estimated to be around £10 billion.
Even though the settlement was “extremely unsatisfactory” in comparison to the initial claim, the Competition Appeal Tribunal has now approved it, stating that it is “just and reasonable.” In the 2016 lawsuit, Merricks, the former head of the UK Financial Ombudsman Service, accused Mastercard of overcharging British citizens for credit card interchange fees.
£200 Million Settlement Approved by UK Court
The 200 million GBP settlement reached by Mastercard Inc. (MA) in a well-known class action case over card surcharges was granted by a London court, drastically lowering the initial 10 billion GBP claim. The lawsuit funder, Innsworth Advisors Ltd., complained that the settlement undervalued the case, but the Competition Appeal Tribunal rejected their complaints.
Consumer activist Walter Merricks led the case, which charged Mastercard with charging companies and customers exorbitant fees. Among the 44 million impacted, the payout amounts to about 2.27 GBP per claimant. This decision may have far-reaching effects for the class action scene in the UK, especially with relation to the function of lawsuit funders. The ruling might influence future settlements and investor involvement in significant legal disputes, as courts are scheduled to review cases that are similar to this one.
Understand the lawsuit
Merricks, a former financial ombudsman, filed the action in 2016 alleging anticompetitive card surcharges. Over a 16-year period, it accused Mastercard of overcharging over 60 million British citizens. Merricks said that the company increased retail costs for customers by charging outrageous “interchange fees,” which merchants pay credit card providers when customers use their cards. Mastercard retorted that their payment method offered significant advantages to customers.
However, Innsworth Capital questioned and criticized the proposed settlement, raising questions about the viability of class action funding in UK. Since it has invested more than 45 million pounds (about $57 million) to finance the court battle, it claimed that the settlement was unjust. In addition to its legal fees, Innsworth will get an extra 55 million pounds (about $70 million) from the settlement, which it felt was insufficient given the resources it had invested in the dispute.
Funder’s challenge
The lawsuit’s funding company, Innsworth Capital, protested the settlement, claiming it was much less than the £10 billion that had been originally assigned to the claim. The argument was that:
- The settlement did not sufficiently compensate UK customers and devalued the claims;
- According to the Competition Act of 1998 and Rule 94 of the CAT Rules, it failed to satisfy the standard of being “just and reasonable.”
- Despite Innsworth’s financial contribution, it was agreed without its approval;
It brought up policy questions regarding the feasibility and equity of collective actions in the UK.
Key takeaways for funders
This decision upholds the flexibility and maintenance constraints by confirming that funders have no discretion over settlements. It also draws attention to the risks of reaching agreements without funder participation. Funders need to reconsider engagement tactics, contractual safeguards, and risk assessment.
Early engagement is crucial since the ruling also implies that funders have limited options for contesting settlements under the “just and reasonable” criteria. This indicates that courts will put judicial efficiency ahead of funder concerns, which will influence how funders handle future collective actions, according to the UK lawsuit finance market.
What is in the judgement?
A London judgment has permitted Mastercard to reach a settlement in a historic case filed on behalf of British customers. After making this declaration, the company stated that an agreement announced in December 2024 to pay GBP 200 million (USD 253 million) to resolve the protracted dispute over card fees had been accepted by the Competition Appeal Tribunal.
Despite criticism from the company funding the claim, the lawsuit was approved. Additionally, corporate executives anticipate that Mastercard will keep concentrating on offering customers and companies a better payment experience, good value, and a range of safe and effective solutions.
Mastercard after judgement
The case had previously been valued at GBP 10 million, but the GBP 200 million transaction was far less. The argument surrounding its acceptance was also viewed as a crucial test for Britain’s emerging class action industry. Innsworth Capital, which provided funding for the lawsuit and contended that the settlement should not be accepted, also stated that the accord was unjust and had previously stated that it highlighted important policy issues for the regime in the UK area as a whole.
After this initiative, Mastercard is expected to prioritize the process of staying in compliance with industry rules and regulatory standards while also concentrating on satisfying the needs, preferences, and wants of users and customers in a constantly changing market.
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Samarth Choudhary is a Chief Editor at keralacobank.com. He has overall editorial experience of 10 years in online media. He has completed his graduation from University of California and masters in Finance from University of Dallas in year 2010. His major interest and expertise is in Finance, Taxes, Government Aid and Schemes. His Major focus is to help users to get relevant information which are published on keralacobank.com in easy and precise form.