Supreme Court judgment in Merricks opens the door for other collective actions such as Gutmann

Supreme Court judgment in Merricks opens the door for other collective actions such as Gutmann

This briefing note follows on from our May 2020 briefing when the case was being argued before the Supreme Court. Whilst this note sets out some of the background to both the Gutmann claim and this latest decision, we have not repeated all of the detail from the original briefing.

On 11 December 2020, the Supreme Court delivered a watershed ruling that will have a significant impact on when collective actions under competition law can be brought in the UK. It could also have very serious repercussions for the railway. The decision in Merricks v Mastercard1 now threatens to open the floodgates to a number of other collective actions that have been waiting in the legal wings for some time. Most importantly, this includes a high value railway collective action claim brought by Justin Gutmann (the “Gutmann claim”) over alleged overcharging for use of railway services by a number of train operators in the London area.

This briefing note follows on from our May 2020 briefing when the case was being argued before the Supreme Court2. Whilst this note sets out some of the background to both the Gutmann claim and this latest decision, we have not repeated all of the detail from the original briefing.

In summary, the Supreme Court’s latest judgment comes as a result the appeal brought by Mastercard Incorporated and others (“Mastercard”) over a 2019 decision by the Court of Appeal (“CoA”). The CoA's decision effectively gave the go-ahead for a collective action brought by Walter Merricks CBE (“Merricks”) to be re-considered for "certification" by the Competition Appeal Tribunal (“CAT”). Upholding the CoA’s decision, the Supreme Court decided that the CAT had made certain errors of law in its assessment of the standard to be applied when certifying a collective action (i.e. determining whether it should proceed to trial). That standard should be a much lower one than the CAT had originally relied on.


In December 2007, Mastercard was found to have infringed Article 101 of the Treaty on the Functioning of the European Union (“TFEU”) by the European Commission over its multilateral interchange fee (“MIF”) levied on transactions between May 1992 and December 2007 (the “EC Decision”)3. A MIF is a fee charged by a cardholder’s bank to the retailer’s bank whenever a consumer pays for goods or services using a Mastercard payment card. Under this scheme, if a consumer pays £100 for a particular good or service, the consumer’s bank transfers the £100 to the retailer’s bank minus the MIF (say £99 if the MIF is £1). In turn, the retailer’s bank includes the MIF within its overall service charge (“MSC”) and will therefore ultimately pass on even less to the retailer (i.e. £99 minus the MSC). As a result, Mastercard’s MIF resulted in retailers incurring unnecessary costs in relation to any transaction in which a customer paid using a Mastercard. The European Commission also found that consumers were likely to have borne at least some part of these costs, as retailers would have sought to recoup their losses by increasing the price of their goods or services.4

In light of the EC Decision, Merricks brought a claim for damages in the UK in 2016.  Until the expiry of the Brexit transition period, follow-on damages can be brought in the UK in relation to any infringement decisions determined by the European Commission by any parties who can establish that they have suffered loss as a result of the anti-competitive conduct in question.5

Merricks’ claim took the form of an opt-out6 collective proceedings order (“CPO”), a form of collective action akin to a class action in the U.S. We discussed this process in our May 2020 briefing note whereby a claim is brought by one entity or individual (the representative) on behalf of a large number of small businesses and/or consumers who have suffered loss but for whom it would be prohibitively difficult or expensive for them to bring proceedings on their own. Please see our previous briefing for more on this. By way of a reminder, to be eligible to proceed, the CPO must first be certified – when the following eligibility test has been met:

a)   Is the claim being brought on behalf of an identifiable class of persons (the “Representative criterion”)?;

b)   Does it raise common issues (the “Commonality criterion”)?; and

c)   Is the claim suitable to be brought in collective proceedings (the “Suitability criterion”)?78.

The CAT refused to certify the Merricks CPO. Whilst there was no issue with the Representative criterion – the claim was brought on behalf of 46 million UK consumers who paid for transactions using a Mastercard payment card between 1992 and 2008 – the CAT determined in relation to the Commonality criterion and Suitability criterion respectively that:

1)   There was a lack of commonality between the different class members of UK consumers to whom the overcharges would have been “passed on” by retailers as a result of Mastercard’s MIF. Different retailers would have “passed on” the charges to varying extents and the spending habits of UK consumers would have also varied considerably. This lack of commonality was taken by the CAT to mean that it would not be possible to assess the quantification of damages that should be awarded; and

2)   The claims were unsuitable for an award of aggregate damages.9 This was due principally to the logistics in how any aggregate damages award would ultimately be distributed to the class members. Merricks advocated a “top down” approach whereby any final damages award would have been evenly distributed proportionately among the respective class members. However, the CAT noted the inherent difficulties in working out how much each individual should be compensated given that there was “no plausible way of reaching even a rough-and-ready approximation of the loss suffered by each claimant”. In any event, the CAT believed that this difficulty (or, indeed, impossibility) in accurately assessing individual losses was an insuperable barrier and offended the compensatory principle.10

The CoA overturned the CAT’s decision on 16 April 2019, determining that the CAT, in the course of considering the above issues, had effectively conducted a mini trial when all it should have ascertained at the certification stage was whether or not the CPO had a real prospect of success.11

The Supreme Court judgment

Though the Supreme Court stopped short of agreeing that the CAT had effectively conducted a mini trial, it nonetheless upheld the CoA’s decision (in a 3:2 majority ruling premised on unusual circumstances – see further below). The Supreme Court found that the CAT’s original decision was “vitiated by errors of law”.

The Supreme Court concluded that:

1)   The CAT was wrong to conclude that there was insufficient commonality between the class members. As noted above, the CAT had reached this view by deeming that retailers would have “passed on” the overcharge stemming from the MIF to varying extents and, as such, the 46 million UK consumers making up the class members would not have suffered the same level of harm. However, the Supreme Court said that this effectively conflated two separate common issues – in other words, the overcharge created by the MIF and the “pass on” charge from the retailers should be considered separately. Whilst the amount of “pass on” charges would inevitably differ between the class members, all class members had nonetheless all suffered from the overcharge stemming from Mastercard’s MIF. This was sufficient to satisfy the Commonality criterion.12

2)   The CAT was wrong to refuse certification on the basis that the claims were unsuitable for an award of aggregate damages. To be clear, the Supreme Court did not state that the CAT was necessarily incorrect in deeming the claim unsuitable for an aggregate damages award in and of itself. However, this was not something that the CAT should have taken as a reason to refute certification. The CAT had, in the Supreme Court’s view, taken this factor of suitability for aggregate damages – (along with all other factors which may denote suitability) – to constitute separate, individual “hurdles” which must be overcome / satisfied in order for a CPO to be certified. This was an erroneous interpretation of these factors. Instead, these factors are merely guidelines as to what may allow the CAT to determine suitability as opposed to an exhaustive list of factors which must be satisfied. Moreover, the CAT was wrong to refuse certification on the basis that an aggregate damages award would have been contrary to the compensatory principle. Indeed, the Supreme Court stated that the actual purpose behind the CAT’s ability to award aggregate damages is explicitly “to avoid the need for individual assessment of loss”.13

More broadly, the Supreme Court stated that the CAT failed to realise that the process for determining whether to certify a CPO is a relative process. That is to say, the CAT ought to have queried whether the collective claims which comprise the CPO were, in reality, more suitable (or had a better prospect of success) as individual claims as opposed to ruling that the complexities involved in bringing these individual claims as a collective action rendered them unsuitable for a CPO. This is a very important nuance, as if the collective claims faced “equally formidable” challenges if they were brought as individual claims, this should not have led to a denial of the CPO for certification.14

Finally – and perhaps most consequentially of all – the Supreme Court followed on from the above by stating that any inherent complexities, and any gaps or deficiencies in methodology, present in a CPO application should not mean that the CPO should fail the certification stage. The Supreme Court noted that, where such difficulties are identified in an individual claim, “the court does not then deprive the claimant of a trial merely because of forensic difficulties…once there is sufficient basis to demonstrate a triable issue”.15 Moreover, the CAT is, in fact, better placed than others to deal with such complex claims on the basis of its specialist knowledge. In any event, there is nothing to prevent the application of the “broad axe” principle16 to address the difficulties in quantifying damages and the court “must do its best on the evidence available”.17

A verdict rendered in unusual circumstances

It is worth noting that Lord Kerr, who presided over the Supreme Court hearing, sadly died just a few days before he was due to deliver his judgment. Fortuitously – for the purposes of the Supreme Court’s decision at any rate – Lord Kerr had expressed his agreement with the judgment of Lord Briggs, whose reasoning was ultimately taken as the approving judgment (as Lord Thomas also agreed with it). Lords Sales and Leggatt, though they dissented from the majority decision, were nonetheless satisfied that their judgment should constitute the dissenting view given Lord Kerr’s clear position before his death.

The implications of the Supreme Court's decision

It is no understatement to say that the Supreme Court’s judgment will have enormous implications vis-à-vis future collective actions brought in the UK. The process of bringing a CPO is one that is very much in its infancy and this guidance from the Supreme Court will doubtless provide a very important precedent for such claims in future. More importantly still, the CAT’s rather restrictive approach to certifying CPOs has been significantly picked apart. The CAT’s original ruling in 2017 implied that CPOs would face a tough hurdle in achieving certification before they proceeded to trial. It would at least appear that this bar has now been substantially reduced.

Indeed, this judgment in Merricks v Mastercard now threatens to unleash a large number of other collective actions in the UK which have either tactically awaited or, as regards the Gutmann claim (see below), been officially stayed, pending the outcome of the Supreme Court’s judgment. It is very likely that we can now expect a significantly increased number of collective actions being brought to the CAT. Merricks’ counsel have already announced that the claim has been re-filed with the CAT where £14 billion in damages are being claimed from Mastercard – the largest sum in English legal history.

However, notwithstanding that this is indeed a momentous judgment it is worth remembering that the Supreme Court’s decision in Merricks v Mastercard does not certify the claim to proceed to trial, much less does it represent a substantive assessment of the case on its merits or guarantee its success. The case has merely been sent back to the CAT for re-consideration as to whether it should be certified. Whilst it seems much more likely that such certification will be forthcoming, it does not yet mark a new era of successful collective action litigation in the UK.

The Gutmann claim

As mentioned in our earlier briefing note, the Gutmann claim against a number of train operators relates to alleged overcharging. The alleged overcharging relates to where a customer already holding a TfL "zonal" travelcard covering part of a journey (e.g. zones 1-6) intends to make a journey going beyond the zones covered. That customer may have been charged for the entire journey, effectively, Mr Guttman argues, paying twice for the part between zone 1 and the zone 6 boundary. This may be because ticket machines at the departure station only sell tickets from that station and not from the zone 6 boundary – or because ticket offices have sold the wrong ticket.

Mr Gutmann is bringing his collective action (which is also on an opt-out basis) against First MTR South Western Trains (“South Western”)18 as well as London and South Eastern Railway (“South Eastern”) and is, in total, valued at around £93 million, which is substantial for railway businesses. The case was brought to the CAT in 2019 but, in a ruling on 23 September 2019, the CAT officially stayed proceedings pending the outcome in the Merricks v Mastercard case in the Supreme Court.  Now that the threshold for CPO certification has been lowered, it is likely that the Gutmann claim will now return with a vengeance to the CAT. If the Gutmann claim is successful, the outcome will potentially apply to any London train operators who might be found to have acted in a similar fashion to South Western and South Eastern. Thus, the future outcome of the Gutmann claim could have hugely significant implications for all London train operators.

The above notwithstanding, a very important point to note is that the Gutmann claim is being brought as a standalone claim as opposed to a follow-on damages action. That is to say, Mr Gutmann is not relying on any infringement decision of the European Commission or the Competition & Markets Authority to prima facie establish South Western’s and South Eastern’s liability. Rather, Mr Gutmann will need to first prove that these train operators have acted in an unlawful manner contrary to the relevant competition laws even before progressing to dealing with quantification of losses, econometric analysis and all the other substantial challenges still facing Merricks in his claim against Mastercard. This will greatly increase the difficulties this claim faces and it will likely be some time before any resolution is reached.

Time will tell whether the Supreme Court’s decision in Merricks v Mastercard really does herald a new era of successful mass collective actions in the UK. Nonetheless, what is clear is that claims waiting in the wings (such as Gutmann's and others) can now move forward to a certification hearing with more certainty as to what thresholds claimants must meet and an increased likelihood of claims being heard and damages potentially being awarded.



1 Mastercard Incorporated and others v Merricks [2020] UKSC 51.


3 The European Commission. Case COMP/34.579 – Mastercard. 19 December 2007. Recital 411. Available at:

4 Ibid. Recital 411.

5 It is important to note that, after the end of the Brexit transition period, decisions of the European Commission will no longer be binding on the UK courts.  As such, this may well make it much more difficult for victims of anti-competitive conduct to bring claims in the UK.  Claimants will face the double challenge of establishing that there was prima facie misconduct in the first place in addition to proving their own losses as a result of it.

6 An “opt-out” collective action means that all members of a particular class of claimants are automatically involved in the claim unless they notify the class representative that they do not want to be included.

7 Rule 79(1) of the Competition Appeal Tribunal Rules 2015. Available at:

8 Rule 79(2)(a)-(f) provides a list of factors that the CAT should consider when determining whether the Suitability criterion is met.

9 Rule 79(2)(f) provides that this is a relevant factor in determining whether the Suitability criterion is met.

10 The compensatory principle is the fundamental principle by which damages under contract and tort laws are assessed in England & Wales.  In essence, it provides that the purpose of damages awards is to compensate the injured party for the loss they have suffered and not as a punishment against the wrongdoer.  The principle looks merely to restore the injured party to their original state or position (i.e. the position they would be in had not the damaging action taken place).  Therefore, the CAT believed that any aggregate damages award in these circumstances would simply be exacting punishment on Mastercard as opposed to accurately compensating victims for the losses they have actually suffered.

11 Merricks v Mastercard Incorporated [2019] EWCA Civ 674.

12 Mastercard Incorporated and others v Merricks [2020] UKSC 51. Paras 64 – 69.

13 Ibid. Paras 76 – 77.

14 Ibid. Paras 70 – 71.

15 Ibid. Para 47.

16 The “broad axe” principle essentially ensures that claimants who have suffered financial loss are not prejudiced from receiving compensation simply due to the complexities in quantifying this loss which, in some circumstances, may be disproportionately costly to establish vis-à-vis the damages claimed to cover the losses being claimed for. In some circumstances, quantifying these losses may indeed be impossible.  As such, the law does not require “unreasonable precision” from a claimant in quantifying losses.

17 Mastercard Incorporated and others v Merricks [2020] UKSC 51. Paras 51 and 72 – 75.

18 It is important to note that South Western’s predecessor train operator, Stagecoach South Western Trains, is also included within the scope of the claim.