Legal Challenge to HBOS merger decision.
A
group of businessmen, customers, account holders and shareholders are
mounting a legal challenge against the UK Government’s controversial
move to allow the merger of HBOS and Lloyds TSB without referring it to
the Competition Commission.
The Merger Action Group [MAG] has
lodged an application with the Competition Appeal Tribunal [CAT]
claiming the decision by Business, Enterprise and Regulatory Reform
Secretary Lord Mandelson was ‘unlawful’.
Download the full press release here: Legal Challenge.
Merger Action Group's Legal Team
The
Brussels-based members of our legal team with the appeal documents.
These documents have now been lodged with the Competition Appeal
Tribunal in London, which commenced Monday 8th December.
MSPs back MAG
A
cross-party group of MSPs have offered their full support to MAG’s
legal challenge and campaign. They met MAG spokesman Malcolm Fraser at
Holyrood. L to R are:- Alex Neil, SNP, Margo MacDonald, Independent, Malcolm Fraser and Tavish Scott, leader of the Scottish Liberal Democrats.
The Merger Action Group has been formed to
challenge the decisions made by the UK Government in promoting the
merger between HBOS and LLoyds TSB whilst disregarding any alternative,
and waiving the normal process of competition. We believe these
decisions to be unlawful and against the interests of fostering
employment, competition and the taxpayer's best interest.
MAG
has asked the Competition Appeals Tribunal to overturn the decision of
the Secretary of State, Lord Mandelson to not refer the Merger to the
Competition Commission, a decision which was against the recommendation
of the Office of Fair Trading.
Please support our campaign, to
ensure the Competition Commission can fully address the impact on the
UK Economy of the significant competition issues identified by the
OFT. In addition we want the UK Government to consider alternatives
that would not cause such competition issues and be better for stake
holders including shareholders, employees, customers and tax payers.
MAG says 'We've Done All We Can In Bank Takeover Legal Challenge' [11/12/08]
The
Merger Action Group said today [Thurs] it felt it had done all it
practically could to highlight the widespread public concern over the
Government's decision to waive competition law to push through the
takeover of HBOS by Lloyds TSB.
Accordingly, MAG has decided to
conclude its legal challenge and will not be appealing to the Court of
Session following the Competition Appeal Tribunal's ruling.
For the full press release on the CAT decision, please click here.
Competition Appeal Tribunal Decision [10/12/08]
The
Merger Action Group tonight [Wed] said it was disappointed to lose its
legal challenge against the Government's decision to ignore competition
law to push through the Lloyds TSB's proposed takeover of HBOS.
But
the group was heartened that the Competition Appeal Tribunal [CAT]
found they were right and proper people to bring the action which had
been raised under public interest concerns.
Immediately after the
tribunal ruling, MAG said it was considering its position over whether
it would appeal the tribunal's decision to the Court of Session in
Edinburgh.
For the full press release on the CAT decision, please click here.
Second Day of Competition Appeal Tribunal [09/12/08]
Business
Secretary Lord Mandelson 'short-circuited' the law to push through the
Lloyds TSB takeover of HBOS under pressure from the Prime Minister and
Chancellor who had already decided it must go ahead, the tribunal heard
today [Tues].
For the full press release on the second day of the CAT, please click here.
Competition Appeal Tribunal, Now Commenced [08/12/08]
Neither
the Prime Minister, the Chancellor nor the Business and Enterprise
Secretary had the power to waive competition law when they allowed the
proposed merger of Lloyds TSB and HBOS to proceed, a court heard today.
For the full press release on the first day of the CAT, please click here.
Legal Challenge to HBOS / Lloyds merger to start on Monday [05/12/08]
The
legal challenge to the UK Government's decision to approve the
HBOS-Lloyds TSB merger without referring it to the Competition
Commission is to begin on Monday [Dec 8th].
For the press release in full, please click here.
MSPs back MAG
MERGER ACTION GROUP – NEWS RELEASE
SATURDAY, NOVEMBER 29th, 2008 - FOR IMMEDIATE USE
LEGAL CHALLENGE TO HBOS MERGER DECISION
A group of businessmen, customers, account holders and shareholders is
mounting a legal challenge against the UK Government’s controversial move to
allow the merger of HBOS and Lloyds TSB without referring it to the Competition
Commission.
The Merger Action Group [MAG] has lodged an application with the Competition
Appeal Tribunal [CAT] claiming the decision by Business, Enterprise and
Regulatory Reform Secretary Lord Mandelson was ‘unlawful’.
The group, whose spokesman is Edinburgh architect Malcolm Fraser, responsible
for the repair and renewal of HBOS HQ on The Mound, has submitted a 37-page
appeal with CAT, which has the power to overturn the Government’s decision.
The group is asking for the tribunal to sit in Edinburgh because the appellant is
Scottish and both Lloyds TSB and HBOS are registered Scottish companies.
However, the group wants to act as a rallying point for interested parties across
the UK. They will be engaging with trade unions, industry bodies, consumer
associations and communities across the country in an attempt to ensure the
public interest is protected.
Mr Fraser said: ‘As a group, we are extremely concerned that due legal process
has been ignored. In Scotland particularly, there is a widespread and growing
unease about what has taken place.
‘Given that taxpayers are ultimately funding the takeover, we are simply asking
that the law is properly applied, and that our long-term interests are protected.
We do not feel that is too much to ask.’
CAT, comprised of High Court Chancery Division judges and other senior lawyers,
is presided over by Sir Gerald Barling QC, one of the UK’s most experienced
competition and technology barristers.
MAG has engaged Brussels-based Scots advocate Ian Forrester QC, a specialist
in European and competition law, to lead the appeal.
Given the legal implications, MAG initially restricted itself to contacting some of
those who have previously spoken out about the merger, but has been setup to
accommodate all those who wish to join. MAG expects a huge interest over the
next few weeks.
Mr Fraser went on: 'Let no-one doubt the seriousness and responsible nature of
our submission. We have taken the best legal advice on UK and European
competition law, and feel that we have uncovered matters which deserve proper
consideration.'
‘CAT has available a number of remedies, all of which we feel would be better
than a decision which we feel was taken in haste, and without cognisance of
changing circumstance.
‘This is an official review before High Court judges. They have the power, under
the Act, to force the Secretary of State to refer the proposed merger to the
Competitions Commission and their decision is legally binding.
‘Decisions by the Secretary of State to refer a merger to the CC have been
challenged through CAT in the past. However, this is the first time a decision not
to follow a decision made by the OFT to refer the merger to the CC has been
legally challenged.
‘We are not taking this step lightly but feel it is in the interests of jobs,
competition and the taxpayer that the decision must be seen to have been taken
properly. The implications are so huge that we could not comfortably stand
aside.’
In conjunction with the official Appeal, MAG is launching a public ‘grassroots’
campaign for support from anyone – business people, mortgage holders, current
account holders, shareholders – who shares its view that the proposed merger
should have been referred to the Competition Commission.
The circumstances which led to MAG’s formation and appeal began on
September 16 when the HBOS share price fell to 88p, casting serious doubts on
the bank’s ability to raise funds on the money markets. The following day, it
emerged that HBOS was in advanced merger talks with Lloyds TSB.
The Prime Minister Gordon Brown revealed that he had personally intervened to
broker the deal and made clear the Government was prepared to ‘rip up Britain’s
competition laws’ to allow the merger to go ahead. The Chancellor, Alistair
Darling, added: ‘We have made a decision that we will waive the competition
requirements in relation to these two banks – that’s not going to be revisited.’
On September 18, the then BERR Secretary John Hutton, announced the
Government would introduce an intervention order to overrule a decision by the
Office of Fair Trading [OFT] to refer the proposed merger to the Competition
Commission.
By the beginning of October, it was recognised by both the UK and US
governments that a rescue package was required to support the stability of the
financial systems. The UK Government announced a package of £400 billion and
on October 13 announced a total of £37 billion to be invested in three banks,
RBS, Lloyds and HBOS. The Government stated that the recapitalisation was
designed to help those banks receiving funds to achieve prudent but efficient
capital structures.
On October 31, Lord Mandelson – who had succeeded Mr Hutton – confirmed
that he was overruling the OFT, claiming competition issues were outweighed by
the public interest benefits of creating financial stability.
MAG’s case against the Secretary of State is based on three key points:
? In law, the Minister was obliged to keep an open mind when making his
decision. However, statements made by the Prime Minister and Chancellor of the
Exchequer in September ‘fettered’ the Minister to keep an open mind in making
his decision on October 31.
? Instead of using the legislation in place at the time of the merger as the
justification for not referring the merger, the Secretary of State created new laws
specifically to approve the merger, thereby retrospectively giving powers to
himself that were not available at the time the merger was announced.
? The decision was predicated on the justification that if this specific merger did
not take place HBOS would collapse and destroy stability in the financial system.
Following the Government rescue package this was no longer the case, because
there was provision for the Government to provide the capital as stated by the
OFT, and therefore his decision was made on a false assumption.
MAG maintains that the ‘unlawful’ actions over the proposed merger of the Prime
Minister, Chancellor and the Secretary of State are against the interests of fair
competition, HBOS, its shareholders, its customers and its workforce, and that
they are stifling competition.
Mr Fraser said: ‘The Government has gone out of its way to discourage
alternative interests to come into play for the future of HBOS. This is not a level
playing field. We aim to level it, and to ensure that the UK's public interest is
served as it should be.
‘Our primary concern – as recognised by the OFT report – is that the
Government has ripped up the competition laws. These concerns will come back
to haunt us in the future.
‘Lord Mandelson, in our view, is acting unlawfully.’
The MAG website where supporters can join the campaign is
www.mergeractiongroup.org.uk
[Please note that the website will not go live until Saturday]
Notes to Editors and Correspondents:
For further information please contact
Gordon Hay on 07784 772905 or
Ian McKerron on 07740 510411
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