INTERNATIONAL: UK - MEGER CONTROL - LLOYDS / HBOS - WAIVING COMPETITION LAW - PUBLIC INTEREST - STABILITY UK FINANCIAL SYSTEM - POLITICAL INTERFERENCE

UK merger control in times of financial crisis : Rebutting the justifications for Lloyds-HBOS

In an exceptional stir, the UK government engineered the merger of Lloyds TSB plc (Lloyds) and HBOS plc (HBOS) waiving the competition law in the interest of “maintaining the stability of the UK financial system”. Notably, the shift is first of its class. This article primarily assesses the said use of intervention notices to oust the jurisdiction of the Competition Commission by political interference and examines it in light of legislative intent and jurisprudence while exploring in greater details the efficacy of the Enterprise act, 2002 on the question of ?public interest’ hypothesizing the test under the Fair Trading Act 1973 as the benchmark. It analyses the wrong approach of the UK government, potential fall-outs of the crucial amendment leading to a prospectively weakened merger review in bank mergers and the inadequacy of the Enterprise Act 2002 while positing an alternative course of action for the rescue of the failing HBOS and highlighting the incongruities in the merger as a solution.

Of all the human powers operating on the affairs of mankind, none is greater than that of competition. [1] 1. On 16th October, 2008 the House of Lords approved the Intervention notice [2] pursuant to section 42 of Enterprise Act, 2002 which added a third consideration to section 58 of the Act, granting to the Business & Enterprise and Regulatory Reform Secretary of State, Lord Mandelson the power to waive competition law in the interest of “maintaining the stability of the UK financial system” and to push through the contentious merger between. [3] The Office of Fair Trading (OFT) in its report to the SoS on 24th October 2008 affirmed that the ‘test for reference to the CC on competition grounds contained in section 33 of the Act is met'. That is to say, that ordinarily the merger

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Harshita Mathur, UK merger control in times of financial crisis : Rebutting the justifications for Lloyds-HBOS, December 2009, Concurrences N° 4-2009, Art. N° 28797, www.concurrences.com

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