Corporate News Blog - UK's CAT Blocks $18 Billion Class Action Suit Against MasterCard in Overcharging Case
Research Desk Line-up: Visa Post Earnings Coverage
MAIN, GERMANY / ACCESSWIRE / July 24, 2017 / Pro-Trader Daily takes a look at the latest corporate events and news making the headlines for MasterCard Inc. (NYSE: MA), following which we have published a free report that can be viewed by signing up at http://protraderdaily.com/optin/?symbol=MA. MasterCard stated on July 21, 2017, that the UK's Competition Appeals Tribunal's (CAT) ruling to block the £14 billion ($18 Billion) British Class Action Lawsuit was welcomed by the Company. The class action lawsuit against MasterCard was filed in September 2016 over alleged inflated card charges that were then passed on to the customers. The ruling brings a major legal relief for MasterCard. For immediate access to our complimentary reports, including today's coverage, register for free now at:
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CAT's Ruling and its justification
In the CAT's case of "Walter Merricks CBE v/s MasterCard Inc and Others", Justice Peter Roth in his ruling said that the CAT "unanimously concluded claims are not suitable therefore the eligibility requirement is not satisfied".
The CAT ruled that it would not grant the requisite collective proceedings order that is required for the case to be moved to trial. The CAT's contention was that the case could not go to trial even if the loss had been suffered by the consumers and could be estimated across the whole class of millions of cases, there is no guarantee that individuals would receive compensation equivalent to the loss already suffered by them. An argument on similar lines had also been put forth by MasterCard.
Commenting on CAT's ruling MasterCard spokesperson said:
"We welcome the Competition Appeal Tribunal's judgment refusing certification for the proposed collective action. As set out in MasterCard's arguments to date, we believe that the claims were completely unsuitable to be brought under the collective actions regime"
Walter Merricks, who had initiated the case, expressed his disappointment and was strongly considering appealing against the CAT's ruling.
History of the British Class Action Lawsuit
The case against MasterCard was initiated by former financial services ombudsman Walter Merricks on behalf of over 46 million consumers who were allegedly overcharged for nearly a 16-year period from May 1992 to June 2008. He used UK's Consumer Rights Act 2015 to file the lawsuit and this is the first case brought under this Act. The Consumer Rights Act 2015 enables consumers to bring collective damages claims on behalf of individuals who have suffered losses under competition law.
The lawsuit aims to recover losses incurred by the consumers due to the high level of interchange fees imposed by the Company on MasterCard transactions during the said period. Interchange fees are the amount that retailers pay for all debit and credit card transactions. The lawsuit claimed that as the retailers passed on these interchange fees to the customers including non-MasterCard customers via inflated prices for goods and services.
MasterCard lost a seven-year battle against the European Commission (EC) which started in 2007. The EC claimed that their fees were anti-competitive. In 2014, the European Court of Justice had said that such fees were in violation of EU antitrust rules. Following which, in April 2015, the European Parliament and the Council of the European Union brought in a new regulation with regards to the interchange fees. The new regulation came into effect in December 2015 and the interchange fees were capped at 0.2% for debit cards and 0.3% for credit cards.
Walter Merricks retained the services of US law firm Quinn Emanuel Urquhart & Sullivan after a European Court of Justice's (ECJ) negative ruling to continue the legal battle.
The current lawsuit would have been the biggest funded class action suits in UK's legal history. If the case had been allowed to continue, it would have been one of the most complex pieces of litigation and would have tested the limits of UK's new laws. The complexity is not only because of the huge number of claimants covered by the class action suit but also because the Consumer Rights Act allows individuals to be automatically included in this type of litigation unless they opt out.
Last Close Stock Review
MasterCard's share price finished last Friday's trading session at $129.27, marginally advancing 0.62%. A total volume of 4.37 million shares have exchanged hands, which was higher than the 3-month average volume of 3.23 million shares. The Company's stock price soared 13.13% in the last three months, 17.56% in the past six months, and 39.81% in the previous twelve months. Additionally, the stock surged 25.20% since the start of the year. Shares of the Company have a PE ratio of 33.80 and have a dividend yield of 0.68%. The stock currently has a market cap of $136.88 billion.
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