Mastercard £14bn lawsuit: 'It's time for firm to accept what it did was wrong'

(c) Sky News 2019: <a href="">Mastercard £14bn lawsuit: 'It's time for firm to accept what it did was wrong'</a>

A former Financial Ombudsman who brought a £14bn class action against Mastercard has told Sky News it is "time the company admitted it was wrong" in forcing consumers to pay higher retail prices.

Walter Merricks CBE spoke to Sky News business presenter Ian King on Wednesday, after the courts ruled that the Competition Appeal Tribunal must now reconsider the class action it threw out two years ago .

Mr Merricks brought the claim against card payments giant Mastercard in September 2016, alleging 46 million people paid higher prices in shops than they should have, because of high card processing fees.

"Originally of course, the retailers suffered the damage, but the retailers naturally passed on those costs to consumers in higher prices," he said, on the Ian King Live programme.

"And that's what I say we have to recover for the consumers who were damaged - 46 million of them."

The lawsuit relates to higher charges to high street customers levied between 1992 and 2008, which it claims were anti-competitive and broke EU law.

The claim follows the European Commission's 2007 decision that Mastercard's interchange fees were in breach of competition law.

He said: "It's now time for Mastercard, I think, to accept that what they did was wrong, to accept that they owe consumers redress and compensation, and to offer to settle this claim."

Scott Abrahams, senior vice president at Mastercard UK who also appeared on the show, said the company had a "fundamental dispute on the basis of the claim," and so refused to settle the case.

He said that the benefits of its card payment system to consumers and to society as a whole outweighed the cost for such services.

"Our model deems that everybody involved with it has a small part to play and a small cost to pay to deliver the types of innovations that we see: contact-less payments, enabling the internet to basically trade in the way it currently does, and our transit system here in London.

"And it's our firm belief that our consumers have really benefited from that."

But Mr Merricks rebutted Mastercard's stance, saying that such arguments were previously rejected by the European Commission.

Asked why Mastercard had not settled the case in the same way as Visa did, Mr Abrahams said: "We had a strong argument then and we still feel we have a strong argument.

"It's our position that our network provides a huge amount of benefit.

"And we will continue to defend that vigorously for consumers for retailers, for everyone involved in making and receiving payments in the UK."

Mr Merricks said: "If those were good arguments, then they [Mastercard] would have raised them before the Court of Appeal in the case that we've just had.

"They have not argued any of that question of consumer benefit.

"They are not in a position to claim that this has not damaged consumers."

It is understood that if the £14bn is awarded, each of the 46 million people eligible for payout will receive around £300.

The lawsuit is being funded by hedge fund Elliot Advisers, who stand to recoup tens of millions of pounds if the class action is successful.

Separately, Mastercard was fined €570.6m (£502m) by the Commission in January, for breaching anti-trust legislation for obstructing retailers' access to cheaper cross-border card payment services.