MasterCard, which is facing a £14bn lawsuit in the first major US-style class action in the English courts, has replaced its longstanding legal team at Jones Day with Freshfields Bruckhaus Deringer as it looks to add firepower to its defence.
MasterCard has hired Jon Lawrence, one of the UK’s leading competition litigators, to duel with Quinn Emanuel Urquhart & Sullivan as the US litigation powerhouse prepares to bring a £14bn claim against the financial services giant on behalf of British consumers hit with ‘illegal’ charges.
Nick Cotter, a litigation partner at Jones Day, was originally handling MasterCard’s defence but the firm has been replaced in favour of Freshfields. Jones Day has been one of MasterCard’s go-to firms for its mounting pile of litigation over interchange fees, and while the firm continues to act on many of these claims, it missed out to Freshfields in a tender process for this case. A leading City litigator told Legal Business: ‘MasterCard has brought in the biggest gun in town to defend them.’ Lawrence’s client list includes the London Stock Exchange, Lloyd’s of London and Ericsson.
The claim, over anticompetitive fees MasterCard charged to process card payments, was originally thought to be worth £19bn but has since been adjusted with the estimated damage to UK consumers now believed to be between £14bn and £15bn.
The biggest claim in UK legal history is expected to be filed within the next fortnight. It will be one of the first to be filed under the Consumer Rights Act 2015, which allows ‘opt-out’ class action-style claims to be brought for the first time in the UK. It was previously hard to bring consumer claims against corporates in the UK as each individual would have had to ‘opt-in’ to the claim.
The case stems from interchange fees MasterCard charged British retailers to process card payments, which the claim alleges were passed onto customers through higher prices. If the claim is successful, every UK consumer stands to be eligible for hundreds of pounds in compensation, unless they explicitly opt-out of the lawsuit. These US-style class actions require a representative, which in this case is former chief financial services ombudsman Walter Merricks.
Quinn Emanuel, which has brought similar claims in the US, has been handed a £40m war chest by Chicago-based Gerchen Keller Capital, the world’s largest litigation funder, to bring the landmark class action. Gerchen Keller Capital will therefore take a slice of any potential damages. Boris Bronfentrinker, a star hire by Quinn Emanuel in 2014 from London competition litigation boutique Hausfeld & Co, is the lead partner working on the claim. He is working alongside Kate Vernon, a recent addition from DLA Piper.
MasterCard lost a decade-long legal battle over interchange card fees in 2014 when Europe’s top court, the Luxembourg-based European Court of Justice, ruled the company had breached competition rules by abusing its dominant market position with the charges. Because MasterCard’s fees have already been found to be illegal by the European Commission, this follow-on claim needs to prove the damage consumers suffered as a result of MasterCard’s anticompetitive behaviour.