Judges should approve the ‘reasonable’ £200m settlement agreed between class representative Walter Merricks CBE and Mastercard, the Competitions Appeal Tribunal was told today – in a claim originally seeking more than £14bn in damages.
The collective action, brought by Merricks, followed the European Commission’s 2007 finding that, between 1992 and 2007, Mastercard’s ‘multilateral interchange fees’ breached Article 101 of the EU Treaty which bars direct or indirect fixing of prices or trading conditions. The claim was brought on behalf of around 44 million individuals. None has objected to the settlement agreement, Mastercard said.
Mark Brealey KC, for Merricks, said: ‘Both Mr Merricks and Mastercard consider the sum of £200m was in a range that was fair and reasonable.’
Litigation funder Innsworth Capital has joined proceedings as an intervener. It argues the settlement agreed is not reasonable and opposes the collective settlement approval order (CSAO) being made. Brealey said: ‘The funder should be respectful of the way that Mr Merricks has conducted the proceedings…Mr Merricks views have to be given weight.’
Sonia Tolaney KC, for Mastercard, told the court that both Merricks and Mastercard had served ‘extensive evidence’ of how the settlement was reached. She added: ‘There is no doubt that in this case the parties themselves are best placed to assess the merits [of the settlement]. Each side negotiated with the benefit of its careful and considered assessment of the amounts Mr Merricks could reasonably believe to recover, weighing this with the costs…of litigation.
‘Mr Merricks has acted in the best interests of the class, as he very clearly states. Mr Merricks trained as a solicitor and is a very experienced class representative involved in this litigation in over eight years and has been robust in defending [the claim]. The sum of £200m is, in both parties’ assessment, more than the class can reasonably expect to obtain if Mr Merricks was to press on with the claim.’
Tolaney added: ‘The funder’s attack is a different target which is: “has Mr Merricks got the best possible settlement he could have possibly got”? We say that is the wrong question.’
In written submissions, Mastercard said the funder’s ‘flawed intervention’ was ‘inappropriate’ and that it would be ‘wrong in principle (and threaten the collective regime) if funders were entitled to hijack the settlement process’. It added: ‘As a large litigation funder with a portfolio of major claims, Innsworth’s interests lie in maximising its commercial recovery, even if that entails a high-risk gamble in the hope that, across its portfolio, one of those high risks will ultimately pay off, covering the losses on the other high-risk claims which fail.
‘The best interests of the class are manifestly not the same. The interests of the class lie in making the best recovery they reasonably can, particularly where the outcome may be that, if they wait, they will recover nothing. Mr Merricks, as their representative, has reached the decision that the settlement sum represents the best recovery the class could make.’
In written submissions, Innsworth said it had funded the proceedings against Mastercard at a cost ‘which now exceeds £45m’.
Charles Bear KC, for Innsworth, said the proposed settlement ‘attributes zero value to the UK claim’. He added: ‘The class does not get a fair return on this settlement on any view of distribution. We say it is completely clear the settlement prescribes zero value to the case, not little value, but nothing.’
In written submissions, the intervener added: ‘The settlement sum is far below what was expected when the claim was certified. The [class representative]’s agreement to the settlement sum represents a complete capitulation on by far the most valuable part of the claim. It was unjustified.’
The second day of the three-day CSAO hearing was mainly held in closed session as the intervener made submissions on confidential information relating to the settlement.
The hearing continues.
