A £14bn class action against Mastercard, brought by former financial ombudsman Walter Merricks, has been given a new lease of life by the Court of Appeal.

The action, which alleges that Mastercard’s charges to businesses breached EU competition law, forcing consumers to pay higher prices over a 16-year period, was ruled unsuitable as a class action by the Competition Appeal Tribunal (CAT) (click here for report), but the Appeal Court yesterday deeming that decision “premature and wrong”.

The case is the first major application of the new regime introduced by the Consumer Rights Act to facilitate the recovery of losses from competition law infringements. The ruling opens up the possibility of millions of British adults each receiving up to £300 in damages. UK-based members of a defined group are automatically included in a legal action unless they opt-out.

The two issues for the Court of Appeal to consider were whether the CAT had set too high a standard in judging the claimant's case on how retailers passed on Mastercard's fees, and whether the calculation of damages on an aggregate, rather than an individual, basis was competent.

On the first point, the court ruled that the CAT had required the claimant to establish more than a reasonably arguable case, and applied a more rigorous process than would have applied in an application to strike out. On the second, it found the CAT's individual-based approach “too narrow”, holding that “the vindication of the rights of individual claimants is achieved by the aggregate award itself”. Distribution of the award would be “a matter for the trial judge to consider following the making of an aggregate award”.

Mastercard has made its intention to fight the case very clear, stating that it will go all the way to the Supreme Court if necessary. It said in a statement: “Mastercard continues to disagree fundamentally with the basis of the claim and we believe UK consumers receive real value from the security, convenience and consumer protection of our payment services.”

Mr Merricks said of the decision: “It’s now time for Mastercard to admit the damage they did, to apologise to the British public, and to agree to pay the compensation they owe.”

The case will now be remitted to the CAT for a re-hearing on whether to certify the class action.