MasterCard is facing a £19 billion (US$24.5 billion) class-action lawsuit for anticompetitive conduct, making it the biggest claim in U.K. history. The landmark case is notable for another reason, as well: It will be the first case filed under the Consumer Rights Act, enacted in October 2015, which expands consumers’ right of redress for losses caused by anti-competitive behavior by advocating the use of private actions.

As Compliance Week previously reported, the law dials up the litigation risk for global businesses, paving the way for more American-style class-action lawsuits in cases where companies might have violated competition law. It also designates the Competition Appeal Tribunal as the primary court for competition claims in the United Kingdom, rather than the High Court.

Following a long-running legal battle with the European Commission that ended in 2014, MasterCard was found to have infringed EU law by imposing charges known as “interchange” fees, on the use of MasterCard debit and credit cards.

Interchange fees work like this: each time a consumer makes a purchase using a credit, debit or prepaid card, the retailer’s bank pays an interchange fee to the cardholder’s bank that issued the card. The retailer’s bank then charges the retailer a cost to recover, amongst other things, the amount it has paid to the cardholder’s bank. These costs are incorporated by retailers into the prices they charge consumers, which increases the price of their goods and services.  

In 2007, the European Commission (EC) issued a decision against MasterCard finding that it had broken competition law through its interchange fees for 15 years between 1992 and 2007. It was ordered to bring an end to the practice within six months. MasterCard reduced the level of its fees in 2008, but then challenged the legality of the EC decision in an unsuccessful, seven-year long set of appeals that ended two years ago.

According to a statement issued by Quinn Emanuel, the law firm representing the consumer class, MasterCard had the option to reach a settlement with the EC to lower its fees. “It chose not to do that and instead imposed unlawfully high card fees for nearly 16 years and engaged in a legal battle for nearly 10 years,” the law firm stated. “MasterCard lost this battle at every level and showed complete disregard for its cardholders and consumers at large, focusing instead on generating unlawful profits.”

Because the EC has already found MasterCard’s fees to be illegal, this follow-on claim need only prove the damage consumers suffered as a result of MasterCard’s anticompetitive behavior, which could reach as much as £19 billion.

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