MasterCard objected to certification of the claims on two grounds: first, that there were not sufficient common issues between the claims; and, second, the Applicant’s proposals for calculation of damages would run contrary to the doctrine that damages in the UK should compensate victims for loss actually suffered. The second objection arose because the Applicant sought an award of aggregate damages which he proposed to divide on an equal basis among all members of the class.
The Applicant had argued that the claims falling within the class were “largely identical”. This was rejected by the CAT for three reasons, on the basis that: (i) the level of pass-on of the overcharge to end consumers in the form of inflated prices would differ on a merchant-by-merchant basis (i.e. different merchants may have accounted for the interchange fee, and therefore passed it on to consumers, in different ways – the “pass on issue”); (ii) different class members would, self-evidently, have spent different amounts at each merchant during the period of the claim; and (iii) class members who used credit cards would have paid different interest payments and received different benefits on those purchases made.
Despite these observations the CAT reiterated that the relevant legal test was whether the claims were “suitable to be brought in collective proceedings” – not whether there was substantial commonality of issues between the claims – and that there is no requirement that all of the significant issues in the claims should be common. However, the problem with this case was that suitability did not follow from the damages claims brought.
Award of aggregate damages
An overarching principle of English law is that damages should be assessed on a compensatory basis (i.e. that claimants should only receive damages which compensate them for the loss suffered as a result of the infringement).
The Applicant argued that the CAT should assess damages using a “broad axe” and a “sound imagination”. He argued that it was appropriate for an aggregate award of damages to be made to ensure that consumers obtain redress. The Applicant submitted an economic report explaining how damages would be calculated.
In order to address the problem that pass-on was not common across all retailers, the Applicant’s economists proposed calculating loss based on a weighted average level of pass-on. The CAT had no objection to this approach in principle. However, the CAT concluded that to do this across the entire UK retail market over a 16 year period would be a complex exercise involving significant data which the CAT was not satisfied existed. On this basis, the CAT concluded that this case was not appropriate for an aggregate award of damages as would apply to a certified class.
Distribution of damages to individual claimants
Next, the CAT considered the Applicant’s proposals for allocation of damages to individual claimants. The Applicant had proposed distributing the damages on a per capita annual basis (i.e. with no consideration given to each claimant’s levels of spending or the merchants in which each claimant made purchases).
The CAT held that the Applicant’s approach would lead to claimants obtaining damages which bear no relationship to the loss that they actually suffered, and was thus contrary to the compensatory principle. In the CAT’s view, the individual issues (i.e. those issues that were not common amongst the class) made it difficult to see how payments to individuals could be assessed on a reasonable compensatory basis. On this basis, the CAT held that the claims were not “suitable to be brought in collective proceedings” and that the standard for making a collective proceedings order had not been met.