Former financial ombudsman Walter Merricks is leading a £14 billion claim against Mastercard for having charged anti-competitive card fees.
According to the BBC, Merricks will be backed by law firm Quinn Emanuel who are basing the claim on behalf of UK consumers on the new Consumer Rights Act. Merricks hopes to secure damages for what he believes are 16 years of overcharging by Mastercard, from 1992 to 2008.
The first stage of the claim will be to present it to the Competition Appeal Tribunal (CAT).
“The filing of this claim is the first step towards consumers obtaining compensation for what Mastercard did,” Merricks told the BBC.
“I am confident that the CAT will authorise the claim to go forward, and I look forward to the opportunity to present our case. This is a watershed moment for consumer redress in this country.”
In 2014, the European Court of Justice (ECJ) ruled that interchange fees for cross-border payment transactions restricted competition within the EU, breaching EU competition rules.
Talking specifically about Mastercard, the ECJ said that the fees were a restriction of competition since they limited the pressure which merchants could exert on acquiring banks when negotiating the costs charged by those banks and that intercharge fees were are not “objectively necessary” to operate the Mastercard system.
The Court also said that Mastercard had produced “insufficient evidence” that the fees created efficiencies that were passed on to consumers.
The European Commission agreed with the ECJ, saying that consumers were unaware of the fees and that they inflated the cost of card acceptance for retailers and therefore increased prices on goods.
Mastercard told the BBC that it would fight the action.
“Now that the claim has been filed, we will take time to review it in detail. However we continue to firmly disagree with the basis of this claim and we intend to oppose it vigorously,” said a spokesperson.