We will force inquiry into HBOS deal, campaigners' leader vows

Published on Tuesday 9 December 2008 20:28

THE man leading a bid to force a competition inquiry into Lloyds TSB's planned takeover of HBOS said last night he was confident of victory.

Malcolm Fraser, of the Merger Action Group (MAG), which is challenging Lord Mandelson's decision not to refer the deal to the Competition Commission, said the group had a right to bring the case and its arguments were strong.

"We firmly believe we have a very strong case and we are confident the panel will reach the right decision," the architect said.

"Despite suggestions from the opposing sides, we are convinced that we had every right and every justification for bringing this appeal because of the vital public interest concerns that dominate this issue."

The MAG took its case to the Competition Appeals Tribunal in London, claiming Lord Mandelson's decision, against the advice of the Office of Fair Trading, should be quashed and a competition inquiry recommended.

Lawyers for HBOS, Lloyds TSB and the Department for Business attacked the MAG's case yesterday, with HBOS's legal representative saying the appeal included "paranoid delusions".

Nicholas Green, QC, said claims put forward that Lord Mandelson had been "fettered" and that it was a "preordained" decision were directly at odds with statements he had made in parliament that he was keeping an open mind.

"The applicants' case has to be, therefore, that the Secretary of State is guilty of a sham, since Lord Mandelson said to the House of Lords that he kept an open mind; the applicants' case has to be that he misled parliament, quite deliberately so," Mr Green said.

"The applicants have not put forward a single piece of evidence that supports these paranoid delusions."

On Monday, Ian Forrester, QC, for the MAG, cited comments in the media by Gordon Brown, the Prime Minister, and Alistair Darling, the Chancellor, in September, stating that competition law would be waived to allow the deal through.

He argued that this "must have" influenced Lord Mandelson, the minister solely responsible for such a decision.

But Mr Green said the tribunal should not give the same standing to "over-enthusiastic" comments by senior politicians to the media as to statements made in parliament.

He also argued that the MAG had not proved it had a right to bring the case, and added that its actions had been lax, presenting "tardy" and unverified submissions, such as a handwritten note detailing its members' banking relationships and shareholdings in HBOS and Lloyds.

Mr Forrester apologised that some of the MAG's submissions had been "a bit rough around the edges" due to the short timeframe in which the case had been prepared.

The MAG said if it won, it would throw into doubt Friday's meeting of HBOS shareholders to vote on the proposed merger. But last night, a spokesman for the bank said its meeting was "totally unconnected" to the tribunal action and would proceed as planned.