Judgment (CSAO Application)

Judgment of the Tribunal in connection with an application (the “Application”) by Mr Merricks as the class representative (“the CR”) and the Defendants (“Mastercard”) (together, the “Settling Parties”) for an order approving their proposed collective settlement of the collective proceedings.

Innsworth Capital Ltd (“Innsworth”), the funder of Mr Merricks, objected strongly to the settlement and was granted permission to intervene in the collective proceedings.

On the last day of the settlement hearing that took place on 19-21 February 2025, the Tribunal announced that it would approve the settlement agreement (subject to a minor clarifying amendment) which the Settling Parties had concluded, for reasons to follow.

In summary, the proposal in the Application was for a settlement of £200 million to be split into three pots:

• One half of the total amount, i.e. £100 million, would be ring-fenced for class members (“CMs”).  Mr Merricks has taken advice from Epiq Class Action & Claims Solutions, Inc (“Epiq”), which he has engaged to act as the claims administrator and is a company that has extensive experience of administering class action settlements internationally.  Epiq’s advice is that if a significantly higher sum than £4.50 were available, a realistic uptake percentage from a consumer class of this size would be about 5%, i.e. around 2.2 million people. That would lead to a payment per claimant of £45. However, there would need to be flexibility in the advertised amount, making clear that the amount could be lower (if a much greater number seek to claim) or higher (if much less than 5% should claim).  Thus if the take-up was 10% (i.e. around 4.4 million people), which Epiq regards as unlikely, the individual payment out of pot (1) would be only £22.50. However, should far fewer than 5% come forward to claim, then to prevent excessive individual recovery Mr Merricks proposes that there should be a maximum cap of £70 per head.
• The second pot would amount to £45,567,946.28, ringfenced as a minimum return to the funder.  This sum was calculated as comprising the costs, fees and disbursements paid by Innsworth (net of any recovery by way of adverse costs awards against Mastercard) up to 30 November 2024 and “total costs, fees and disbursements incurred until the end of the distribution phase that are budgeted for and anticipated in respect of the settlement, noticing and distribution under the LFA.
• Pot 3 is constituted by the remaining sum of £54,432,053.72.  This pot was made available to give Innsworth its return, subject to any further sums that need to be used to effect distribution to more than 5% of the Represented Persons, should Innsworth not agree to make additional funds available. The CR recognised that the Tribunal may decide that at least some of this pot is used to either make up any shortfall in Pot 1 where there is a higher take-up than 5% (if the Tribunal concludes that the amount received by each class member should not be reduced in those circumstances to maintain a payment at the level of Pot 1 only), or it could be used to pay non-participating class members indirectly through a payment to a consumer charity or the Access to Justice Foundation so that more than half of the Settlement Sum is distributed to the Class (or proxies for the Class).

Innsworth regarded the £200 million settlement figure as too low. Under the terms of the LFA any dispute or claim arising out of the agreement was to be referred to arbitration. Innsworth commenced arbitration against Mr Merricks. Mastercard agreed to give Mr Merricks an indemnity of £10million as a term of the settlement.

The Tribunal held that it was entirely satisfied that the terms of the settlement were just and reasonable such that the settlement should be approved under s. 49A(5) Competition Act 1998. The likelihood of judgment being obtained for an amount significantly in excess of £200 million was low. Further, the personal indemnity to Mr Merricks, in the unusual circumstances of this case, did not impugn the Tribunal’s view of the settlement.

The Tribunal awarded Innsworth a return on its investment of 1.5. i.e. 50% of Pot 2, to be paid out of Pot 3. The Tribunal also decided that Pot 3 should be used to supplement Pot 1 in the event that more than 5% of the class submit claims, to the extent that further monies are needed to enable each CM to receive £45 (or such lesser sum as Pot 3 permits). To the extent that money remains in Pot 3, it should go to charity, as proposed by the Settling Parties.