Neutral citation:

[2008] CAT 36


10 Dec 2008



Judgment of the Tribunal refusing an application for review under section 120 of the Enterprise Act against a decision of the Secretary of State for Business, Enterprise & Regulatory Reform (“the Secretary of State”) dated 31 October 2008 not to refer to the Competition Commission (“CC”) under section 45 of the Act the proposed merger (“the Merger”) between Lloyds TSB Group plc (“Lloyds TSB”) and HBOS plc (“HBOS”) (“the Decision”).

Given the circumstances of the proceedings and the requests by the Secretary of State and the Interveners, Lloyds TSB and HBOS, that the Tribunal hear and decide the matter with exceptional expedition so as to enable the result to be known prior to the general meeting of HBOS due to take place on 12 December 2008, the Tribunal ordered an expedited timetable. A hearing was held on 8 and 9 December 2008 with judgment handed down on 10 December.

The Secretary of State, supported by HBOS and Lloyds TSB, submitted that the Applicants had failed to establish that they were “persons aggrieved” by the Decision within the meaning of subsection 120(1) of the Act and that accordingly the application should be dismissed on that ground. The Tribunal considered that the Applicants’ standing was borderline. However, the Tribunal found that the Applicants were “persons aggrieved” in the “wholly exceptional circumstances” of the case, particularly with regard to the specific interest and strong feeling that the Merger has aroused in Scotland.

The Applicants’ challenge to the lawfulness of the Decision was mainly based on certain statements attributed to the Prime Minister and the Chancellor of the Exchequer which had allegedly fettered the exercise of the Secretary of State’s discretion to refer the Merger to the CC. The Applicants further submitted that there were manifestations of the fettering effect of the government statements in the way the Decision was drafted.

The Tribunal dismissed the Applicants’ contention that the Decision was vitiated on the basis that the Secretary of State was fettered by the statements of the Prime Minister and Chancellor of Exchequer. While it was clear that the government was in favour of the merger and had committed itself to making legislative changes to enable the Secretary of State to intervene in respect of the Merger, the Applicants had not shown that the Secretary of State had failed to exercise his discretion independently. The Tribunal held that the unchallenged evidence of the Secretary of State clearly showed that he had met officials to discuss the advice and submissions received and, having satisfied himself that all the evidence and options had been fully examined, he reached the Decision. The Tribunal also referred to a statement by the Secretary of State to the House of Lords. The statement indicated that the Secretary of State would ensure that he received all available advice and views before reaching the Decision and that he had an “open mind” to both competition and public interest considerations.

The Tribunal also found that there was no merit in any of the Applicants’ arguments against the way in which the Decision had been drafted.

This is an unofficial summary prepared by the Registry of the Competition Appeal Tribunal.