First in short order:- MAG's case painted a wholly convincing picture of a Secretary of State who can only have believed he had no other choices but to do anything and everything not to refer this merger of banks to the Competition Commission. No evidence at all was offered to prove that he could or did at any time consider alternatives. Government evidence admits that all opinions on the matter received by Lord Mandelson pointed one-way only (except a hint of scenarios by the FSA of how HBOS could prosper without merger). This 'all one-way only' and 'only option on the table' etc. one-dimension by itself, however, undermines the Government's defense while appearing at first sight to support it. Why, because it is impossible that there are no alternatives, and without them the Secretary of State cannot balance his judgement as he is legally (morally) bound to do. MAG's case failed, but if subject to the same tests so too should the Tribunal Judges's reasoning fail similarly. If the Secretary was not mentally 'fettered' he was surely logistically 'corralled' into a one way system! You can read of all this below in detail and at such length you better conclude that life is not too short for this, or that the fate of 20,000 employees and Scottish and other public interest warrants that you need know more. A 40 pages of Judgment was handed down caveated many pages in to remind us this judgement concerns lawfulness and not correctness of the Secretary of State's decision not to refer the merger of the banks to the Competition Commission. The result of that is a defeat for the appeal, which those of a more cynical persuasion than I may not be surprised at. What was the basis for M'Lordships' judgement?
It turned on the flexibility allowed to the Secretary of State in determining public benefit, the new public interest consideration under section 58 of the Enterprise Act 2002 as laid before Parliament on 7 October, House of Lords 16 October and the Commons on 22 October. It came into force on 24 October.
It is not the credibility or plausibility of MAG's case that can be doubted, and must seem so too to anyone who has followed this case - the remoteness of the possibility of such a purely lawful mind of Lord Mandelson - that is the story favoured by Milords' judgement - that MAG's case "fails" for contrary evidence that all was as should be, absolutely - rather than what seems more realistic, simply concluding "case not proven", assuming there can be such choices of verdict. But then, the Tribunal's job was to fully securitise and insure the Minister's assets by finding proof-positive that the Secretary of State had behaved lawfully absolutely, and not merely to judge if MAG could or could not either prove or merely persuade them otherwise. The OFT's firm and legally binding judgement that referral to the CC is necessary hung over the case like the political shadow of a hangman's noose. So the Tribunal had to find positive absolute evidence of the Minister's fully lawful behaviour and process, nothing less. But to do so required a long stretching of spectacular quantities of credulity not to see the overwhelming obvious fact that the Secretary of State was out on a limb where if he had two choices the difference between them were extreme and personal, his political life or death, and the clock ticking! How much imagination does it require to see that a decision to refer the merger to the CC would have invoked the pitiless wrath of Lloyds TSB and HBOS boards, political bosses, and who knows who else, the newspapers certainly (the scope for derision of a minister passing a law one minute to do x and then next minute deciding to do y, how funny), maybe the markets might decide another short-selling spree, or maybe, just maybe, some voices might think 'oh, a man of sound principle', while others would scream 'government confusion, Nero fiddles, Rome burns!" Of course, the man was fettered, and indeed QC Forrestor acting for MAG said so, and felt some sympathy for his awkward position, any other view is just nonsense! The judges conclude that MAG's evidence fails to be sufficient for not being absolute, a standard of proof that would be reasonable in a capital murder case, but not in the circumstances here. This is where the Tribunal's logic fails - so far as I see it, but I'm a banker not a lawyer.
MAG's case was that this order should not be applicable retrospectively to a merger bid that is conditional on non-referral to the Competition Commission (CC) agreed to weeks earlier and so adamently and publicly supported by the PM & Chancellor since then that it is inconceivable that Lord Mandelson was not 'fettered' in his 'Decision', which only he is entitled to make and only if the report of the Office of Fair Trading (OFT) allows him some latitude to do so, which it could not until the Enterprise Act was amended to specifically include financial stability as a public interest benefit, an amendment brought in just for this one case.
Milords found their way to a judgement that the flexibility allows the Secretary of State an unbounded latitude in defining public interest benefit sufficient to resist the OFT's opinion because it did not in any specifics address the matter of financial stability to balance that against competition issues, which is stretching into practical & legal extremes, so that this could include retrospectively applying the law, but anyway Lord Mandelson did not take his Decision until October 30 and has said or written nothing to prove he was firmly biased (fettered) to pre-judge the matter. MAG's case is perfectly plausible. If the Tribunal judgement was merely saying MAG's case is plausible but fails only because of standard of proof, fine. But, they go further than this to say they accept positive proof to the contrary that the Secretary of State did not behave unlawfully in thought or deed when that proof is no less circumstantial and much less substantial, also for being less independent, than MAG's evidence. If any inolved at all in this case ask themselves 'do I believe this?, in absolute ministerial rectitude to balance two sides of an argument when only hearing one side? Can such a political bird exist? The Judges refuse to concede the very strong probability that MAG is right and insist instead on MAG needing to find absolute proof (and indeed in their judgement they use words like 'absolute' and 'wholly') that Mandelson could decide something being a politician merely to please by agreeing with his political bosses, the PM & Chancellor, so as not to embarrass them, and thereby the whole Government, especially not after rushing in a new law through both Houses of Parliament specially so he could do just that. The basis for the Tribunal judges' verdict teeters on quite flimsy conditions of proof. Despite the very short time available to prepare, the judges require something more than however many compelling examples of circumstantial evidence; this is unreasonable, just as it is unrealistic if not laugh-out-loudable to ascribe to Lord Mandelson the wisdom or integrity of Solomon not to be swayed, fettered, biased, pre-judging, believing in only one-way. If the Judges need a smoking gun in the hand of the defendant standing over the victim and saying to more than one independent witness yes, fair cop, I don' that an' good riddence too, I meant too an' all! - well do we not have that in that there is no shtred of evidence to show that the Government at any time sought or received evidence as to how HBOS independence could be secured. The Government's evidence confirmed by the Tribunal judges is that all the information considered pointed only one way. This is technically so unrealistic as to HBOS's true circumstances, as it would be even for a bank in a truly parlous condition, which HBOS is not, for there to be no possible ways and means of saving the bank's independence (and thereby 20,000 jobs and their families and other dependents). Sir Burt, Sir Matthewson, and I could introduce any number of bankers who like myself, would agree that of course the bank can survive and be viable with the same temporary help Government is supplying to all the banks. It seems from the evidence however that HMT & others advised Lord Mandelson probably verbally that not only is the merger bid conditional on non-referral to the CC, but the government's aid to the bank is conditional on the merger - an aspect emphasised by The Chancellor publicly on 18 November - if ever a hellish circle of manicled logic this is it, and therefore how is it at conceivable to imagine the Secretary of State's mind was not made up for him by others, and not least of all when he mistakenly imagines, stating so in the House of Lords on 16 October, that reference to the CC could result in a review lasting years. My Lordships in their judgement stretch reasonable credulity past breaking point. If the Secretary of State is the person the Tribunal judges say he is, truly I take my hat off to him and say he is the finest living gentleman in all England with the batting style of W.G. Grace. What are the specifics of the judgement verdict? For that now read on.
But key to this is the report required from the OFT as to whether the evidence it received showed that public interest benefits outweighed the loss of competition. The OFT stated clearly, "any relevant customer benefits in relation to the creation of the relevant merger situation concerned do not outweigh the substantial lessening of competition and any adverse effects of the substantial lessening of competition, and it would not be appropriate to deal with the matter by way of undertakings under paragraph 3 of Schedule 7 to the Act." The OFT found that reference to the CC was warranted in respect of three out of the dozen or so areas of overlap between the businesses of the merging companies (i.e. personal current accounts (“PCAs”), banking services to small-and medium-sized enterprises (“SMEs”), and mortgages). These are very substantial areas." The Judges conceded that the OFT does not have to be certain about this, merely believe in the probability. This would be tested by the CC. That is the one properly ccoked ingredient, pasts al dente. From that point on the spaghetti starts to get soft, forked and caked with sauce. One the one hand, the judges did conclude that the OFT is not remitted to adjudge the public interest benefit in weighing the balance between competition issues and public benefits, but may do so, but did not do so in its report. This is somewhat disengenuous since the detailing could involve confidential business information such as the 'secret dossier' (see previous essay below for more about this)? Then too, the Secretary of State, say the judges, is obliged to refer the merger to the CC if the OFT advises him to do so, which it did! On the other hand, the Secretary of State's consideration under paragraph 45 has two counter-balancing matters to be weighed in the balance:
45(4)(c) one or more than one public interest consideration mentioned in the intervention notice is relevant to a consideration of the relevant merger situation concerned; and
45(4)(d) taking account only of the substantial lessening of competition and the relevant public interest consideration or considerations concerned, the creation of the relevant merger situation may be expected to operate against the public interest.” and
45(6) provides: “For the purposes of this Chapter any anti-competitive outcome shall be treated as being adverse to the public interest unless it is justified by one or more than one public interest consideration which is relevant.” and The Decision states that the new public interest consideration contained in section 58(2D) of the Act, namely the interest of maintaining the stability of the UK financial system, is relevant to this case.
There then follows about 6 pages concerning the standing of MAG as 'aggrieved person' finding that they do represent such persons. Next there follows the question of the legality of the Secretary of State's decision insofar as the decision had been made for him already weeks earlier, overlapping with irrelevance of advice from the FSA and the irrelevance of other considerations when conditions have changed, such as the EU Commission's permissioning of state aid and the EU general law principle of proportionality. The judges noted that MAG was not seeking considering of the specifics of competition issues or HBOS's financial difficulties, and MAG accepted that under the Act the Secretary of State is entitled to intervene on the grounds of public interest. It follows that neither the Secretary of State’s decision to issue the Intervention Notice, nor the decision to introduce the new public interest consideration, nor the Order by which such consideration was inserted into section 58 of the Act are the subject of any challenge.
MAG's challenge had a broad aspect ('over-arching') and a narrow one. The latter is that Lord Mandelson was 'fettered' by statements made by the Chancellor and the Prime Minister (when they committed to the merger). That this idea is debatable may appear a surprise to those who consider all politicians in high office are fettered and would have immense difficulty even to convince themselves otherwise. Perhpas the legal minds find it improbable that the fate of banks, not least one called 'Scotland' might be politically state-sensitive and thereby also strongly fettered? But, the judges noted that MAG could not give as evidence any statements by Lord Mandelson himself indicating that he was so 'fettered', and given that only he can make the decision not to refer the merger to the CC on his discretionary balancing of public interest benefits. But, surely he could not judge at all with any confidence what referring the case to the CC might do to the two banks. No-one can know that. Opinions would be finger-in-the-air, back-of-envelope, speculation, guesswork. Ask me as a banker who can look at the published accounts only and I'd say it's not a problem; the banks will be fine. They have robust valuable businesses and I cannot find signs of toxic assets in sufficiently large amounts or potentially mounting losses that either bank should not be able to manage these given the breathing space afforded by Government aid to do so. And that is something I am an expert on and can pronounce about with no false confidence and more than usual aplomb.
Mr Forrester, for MAG, had put its case in two ways: first, the over-arching argument that government preordained by-passing competition rules (something that was a condition attaching to Lloyds agreement to bid for HBOS, by the way!) regardless of whose responsibility it was to take the Decision, and this must have fettered how the Secretary of State analysed the Merger. Unfortunately for MAG, Lord Mandelson is not known to have said (or written) anything himself that showed this. This also I suppose means so far no leaks either from inside Whitehall to prove otherwise?
Mr Forrester relied upon statements attributed to the Prime Minister and the Chancellor of the Exchequer, in particular remarks made by the Chancellor when interviewed on BBC Today Radio 4 on 18 September. Mr Forrester also argued that the Prime Minister and the Chancellor were not legally permitted to waive the competition rules as they indicated they would on 18 September 2008.
MAG's narrower point was about how Lord Mandelson framed the Decision. In this regard it was argued that he should have taken account of the OFT's concerns in his formal Decision instead of failing to refer to them and relying for competition input on inappropriate other sources (e.g. the FSA asked to validate the financial stability benefit but not assess the competition disbenefit), and that one-sidedness or bias was a manifestation of the fettering effect! The Government team produced evidence from a civil service advisor to Lord Mandelson describing the process they followed. Some cases are sites concerning lawfulness and correctness definitions at law. But most of the cases were not under Scottish Law, a problem solved by the opinion of the judges that Scottish legal precedents would seem to be similar. These cases all lacked the political dimensions of MAG v. Mandy and be questionable on that score? Unfortunately Walter Scott's invocation of the 1707 Treaty of Union in defending the rights of the Scottish banks in 1826 was not recalled by Forrester. The Treaty is a constitutional right that would oblige Lord Mandelson to specifically determine that the merger is in the interests of the people of Scotland, something perhaps he assumes to be so is is this not all one and the same whether Scotland or UK? The OFT and the Enterprise Act, and even EU Competition Law, can and do consider geographical areas smaller as well as bigger than member states. The cases boiled down to making a distinction as to whether legitimate considerations were ignored or excluded rather than whether the considerations were considered wrongly or inadequately. And while outside pressure may be proved, it also has to be proved that this pressure did indeed influence the decision-taker to fetter himself, which is hard when Mr Forrester could not argue that the Secretary of State did or said anything to fetter his own discretion. Reliance is placed upon remarks by the PM and Chancellor in the nature of spoken, unscripted statements. But what about when spoken means statements to HC, and who says these are unscripted e.g. statement to HoC by the Chancellor on 6 October 2008, "In September, we amended the competition regime to allow the interests of financial stability to be considered in the merger between Lloyds TSB and HBOS. We took this exceptional measure because financial stability had to come
before normal competition concerns.” Somewhat puzzling, since the Enterprise Act 2002 does not seem that unobliging in this respect? But the law was adduced to needing amendment by introducing a new public interest:- “The order specifies the maintenance of stability in the UK financial system as a public interest consideration under Section 58 of the Enterprise Act 2002 – a new public interest consideration. This will enable the Secretary of State to intervene in those mergers in order to be able to make the final decisions based on the vital public interest of financial stability, alongside the competition issues." This is not then a matter of cabinet responsibility to consider raising the balance of other public interests such as the premiership division football stadium's worth of employees and their families who will lose jobs in a deep recession? Quite damning too, on the face of it, were interviews with PM and Chancellor and also a press briefing by the Prime Minister’s Spokesman on 30 September when the Spokesman stated, “Our role in this was to make a commitment to introduce legislation in order to facilitate the takeover and we stood by that commitment.” It beggars belief that after specially introducing legislation to ensure non-referral to the CC was allowable in this very merger case that the Minister would not then do that, but actually refer it to the CC? To have done that would have severely politically embarrassed both the PM and the Chancellor. The problem here surely that if you do what your boss says should be done are you following orders or freely making up at your own perfect discretion your own mind on the matter that just happens to coincide with what your boss has told the nation should and will happen? Politicians may not script a policy, but it can be surely as good as when enunciated not once but several times to millions of voters? It is a bit like asking whether a jury has been influenced by media comment during a trial. The law does not normally assume that persons can remain indifferent to such influences, not sufficiently that we can have perfect confidence in perfect discretionary judgement, and least of all when it is a one-person decision? But all this line of thinking was not pursued - thoughn might be a plank for appeal?
However, the civil service evidence was that stability issues were considered right up to 30 October, "“[On the afternoon of 30 October], the Secretary of State met with officials to discuss the advice and submissions he had received and to reach a decision. At our request, officials from HM Treasury were also present in case the Secretary of State had any specific further questions about the evidence of the Tripartite Authorities relating to the implications of the merger for financial stability. Having satisfied himself that all the evidence and options had been fully examined, the Secretary of State reached the decision, in line with our recommendation and on the basis of the arguments set out in the submission dated 28 October 2008, not to refer the merger to the Competition Commission.” We are not told how long this meeting was or what kind of analysis was undertaken, or why civil servants should not also feel 'fettered' by the public commitments of their political masters? While the tribunal cannot consider whether the stability of the financial system was adequately considered, there is an issue if it was in reality not really considered at all in some rigour? But in Lord Mandelson's statement to the House of Lords (16 October) he said explicitly that he had not yet evaluated the financial stability issues. "The order will allow us to make careful and urgent consideration of financial stability an additional part of our assessment process, and as a result, support our work to help millions of UK businesses and families get through these very difficult times. It is a critical addition to the public interest considerations specified in the Act and I commend it to your Lordships" and also, "This will include advice from the Treasury, the Bank of England and the FSA, which make up the tripartite authorities. I am sure that your Lordships would agree that swift, decisive action is needed to give investors the regulatory certainty that they need and to send a clear signal to the market about the proposed merger between Lloyds TSB group and HBOS." To any normal reader this would surely look as though a view had already formed and would not change unless subject to challenge. Every such decision has opposing arguments. Did Lord Mandelson ever receive from anyone a considered view that the merger was not essential to the UK's financial stability? Did he read the secret dossier, if so when? Lord Mandelson also stated in the House of Lords, "The caveat is this: the order that we considering [sic] is brought forward to allow for the careful consideration of financial stability as part of our assessment of the proposed merger between Lloyds TSB Group and HBOS. This debate, therefore, is not about the assessment, which I have yet to undertake. I will do so following receipt by me of the OFT’s recommendations as to the competition and public interest issues which are due by 24 October. I have an open mind to both the competition and the public interest considerations...Therefore, I do not envisage a one-, a two- or a three-year review following whatever decision I take on the merger in due course. I will not be drawn on conditionality in advance of my decision, but I assure your Lordships that, should a decision be taken for the merger to go ahead, we will not relax our vigilance at any time when it comes to the proper protection of consumers.” There are two weaknesses here, one that the Government can on an ongoing basis guard the rights of consumers under competition law (without resorting to the Competition Commission ex-ante, only ex-post) and two, Lord Mandelon had a prejudicial view, perhaps based on someone else's advice, that reference to the CC could involve a review lasting 1-3 years! An exaggeration surely? There is political time, legal time and other people's sense of time, but here is a Faustian pact; sacrificing the long term for the short term, kicking the ball into the long grass. It would surely require the most heroically principled and independently-minded of all politicians not to feel a fettering on every side in this case just as MAG asserted, an argument for which surely reasonable doubt is sufficient rather than absolute proof as the judges appeared to require? The judges noticed that there was ammunition here for MAG, which Forrester declined to load into his guns. The judges wrote in their judgement, "the conclusion would be that the Secretary of State’s statements to Parliament, the process of instructing the OFT to investigate and report to him, the receipt and consideration of representations from other bodies including the Treasury and the carrying out of the processes described in Mr Saunder’s witness statement were little more than an elaborate sham designed to deceive Parliament and others and achieve a preordained result without the exercise of the independent decision-making required by the governing legislation. Mr Forrester avowed that his clients’ case attributed no personal reproach to the Secretary of State, but concentrated its fire on the decision, which he said contained manifestations of a readiness to waive the Merger through without a reference to the CC – a readiness which could only be attributed to the fettering effect of the government’s statements." We now come to the THE CONCLUSION.
According to MAG are 3 manifestations of the alleged fettering. FIRST, instead accepting the OFT’s binding analysis balancing competition and other public interest consideration, TWO, a “tinkering”, a “denigrating” or a “discarding” inconvenient parts of the OFT Report and relying on other sources, and twisting the sumamry of submissions including about short and medium term perspectives, “In the medium to longer term Government would have withdrawn its support, leaving either a fully independent HBOS once more, or an HBOS in the hands of a “no overlap” purchaser: the Stage II counterfactual. In these circumstances HBOS would also constitute a significant player in the market place in the medium term.” (paragraph 85 of the OFT Report)and the précis in the Decision:
“In the medium term, once stability had returned to the markets, the Government would sell HBOS on to a new owner or owners.” (paragraph 18 of the Decision). the judges find there is absolutely nothing in this point; the drafting neither diminishes the OFT finding nor indicates that the Secretary of State was failing to treat that finding as binding. The judges also found that the second manifestation of the alleged fettering also relates to the section of the Decision where the Secretary of State summarises submissions made to the OFT by interested parties. MAG had pointed to the fact that in the submissions by the FSA to the OFT there is mention of the competitive strengths of HBOS under different scenarios, and that the Secretary of State mentions the FSA’s submissions in his summary in the last three sub-paragraphs of paragraph 22 of the Decision. MAG's view that this showed the Secretary of State going to the FSA for competition analysis rather than to the OFT,
as evidence of the fettering effect, is concluded by the judges to be wholly without merit. The submissions of the FSA do concern the consideration of maintaining the stability of the financial system, and are summarised in a section of the Decision which is expressly dealing with that consideration and not with the OFT’s competition concerns. What the judges miss here is that HBOS's stability is not the stability of the financial system (currently unstable for reasons not to do with any one bank of which HBOS may be a wholly innocent victim). The FSA is not competent to judge the stability of the financial system, only the resilience of individual banks, and they do say there are scenarios under which HBOS can thrive and remain independent? The judges conclude too that nothing in Lord Mandelson's Decision or anywhere else suggests that he has done anything other than treat the OFT’s findings on competition as binding, or that he has treated the FSA’s submissions as diminishing those findings. MAG's third vice also in the Decision concerns the FSA’s submissions. Those submissions are said to contain an error of law relating to the effect of the State aid provisions of the EC Treaty upon a banking institution. By referring to this in his summary of submissions made to the OFT the Secretary of State is said to have incorporated the error of law into the Decision thereby vitiating it - perhaps merely a technicality? The FSA’s views are said to differ from those which the OFT put forward in the OFT Report, and the latter are belittled by reference to the former. “EU State aid rules preclude a government-owned entity from competing aggressively with private sector banks”. In support of a contention that this is wrong in law, Mr Forrester for MAG referred to the Commission Communication on state aid to financial institutions in the context of the present global crisis that the Commission’s recently modified approach meant that there would be little if any constraint on the competitive ability of a recipient of State aid. This is so, although there is an obligation to make this aid costly. The judges had heard from the Government's Mr Lasok’s argument that the position is rather more complicated than Mr Forrester indicated. For example the Communication makes it clear that companies in receipt of State aid by way of guarantees must expect to have imposed on them behavioural constraints and restrictions on their commercial conduct which could limit their competitive effort as the price of the aid (see paragraph 27 of the Communication). However, the judges concluded "we do not need to decide whether there was or was not an error by the FSA: suffice it to say that at the level of generality of the FSA’s statement we very much doubt if their remarks could be criticised. Moreover, those remarks are not so very different from the comments of the OFT on the effect of the State aid rules which the Secretary of State also cited in the Decision. The OFT said “While [bringing HBOS into partial or full public ownership] may have led to the imposition of restrictions on the scope of HBOS to compete in the market (to comply with EC law on state aid), a publicly owned HBOS would continue to exert some competitive pressure in the market though it would be potentially a significantly weaker force in comparison with conditions prior to the current financial crisis.” Therefore both bodies took the view that the State aid rules could have a dampening impact on competitive efforts of a recipient".
In any event, the judges say, the Secretary of State was doing no more than reciting the submissions received by the OFT, not agreeing or adopting them, and therefore this is a hopeless point.
As to the MAG’s contention that the PM's and other government ministers’ statements led Lloyds TSB not to offer any undertakings to the OFT, Mr Forrester conceded that this was not itself a separate ground upon which the validity of the Decision could be impugned; but it was, he said, a manifestation of the unlawful and regrettable consequences of a Government acting too categorically when it lacks the power to do so i.e. a result of fettering. This was strenuously disputed by Miss Davies on behalf of Lloyds TSB. Anyway, the judges concluded this issue is irrelevant.
In the light of all that, the judges considered MAG's contention fails on the ground that the discretion of Lord Mandelson was fettered by statements of the Prime Minister and the Chancellor of the Exchequer.
MAG's contention that Lord Mandelson closed his eyes or paid little attention to the availability of government bailout package for banks, which in MAG's submission
presented a real alternative to the Merger in order to save HBOS, the judges say Mr Forrester did not really develop this in his oral presentation, which was almost entirely taken up with issues relating to the fettering point. However, he did say he was maintaining the argument that, in view of the fettering, Lord Mandelson’s attention was elsewhere, so that he paid insufficient attention to alternatives (the recapitalisation scheme announced by the government on 8 October 2008) and overmuch on the Merger and FSA’s views in regard to HBOS’s ability to be an effective standalone competitor should the Merger not take place, as opposed to the legally binding views of the OFT. The judges concluded the main problem with this is that it is unsustainable in the light of the evidence. Well, here of course, we have the problem again of what is and is not in the 'secret dossier' about which there is no reference or any comment by the judges of what if anything they concluded from it, a document only they could see? An appeal might suggest this amounted to 'fettering' of a siilar sort, or also of another sort insofar as not seeing this fettered MAG's case? The judges' view is that the question of the need for the Merger to go ahead in the light of the government rescue package was discussed by the Secretary of State during the House of Lords debate to which we have referred. In the run up to the Decision the he received representations from several sources as referred to by the civil servant statement and the HMT/ BoE/ FSA view that recapitalisation is complementary and not alternative to the Merger and, accordingly, that the Merger was necessary notwithstanding the recapitalisation programme. This is a very curious view and could certainly be challenged, and frankly the idea of 'complementarity' here makes no technical sense other than if the recapitalisation is conditional on the merger going ahead? Here is another fettering of a most pointy stick kind! Milord judges say, "Further, this very issue was specifically considered in the briefing note dated 28 October 2008 prepared for the Secretary of State by his officials. This note is referred to by Mr Saunders at paragraphs 24ff of his statement. The evidence is therefore all one way and there is simply no basis for the allegation that the issue of the continuing need for the Merger was not properly considered by the decision-maker. Nor, for the reasons already given, is there any substance in the claim that the Secretary of State wrongly took account of the views of the FSA on the competitive strength of HBOS in preference to the position of the OFT, or failed to have regard to the Commission’s latest position on state aid. It follows that these points, whether under a label of irrationality or failure to take account of relevant considerations or some other label, also fail." I'm sorry to be objectionable here, but I do not see a clear logic here. The words which undermine the any possible logic is to say all the arguments are one-way! That by itself shows that the evaluation was biased. It is impossible for there to have been no practical strategies whereby HBOS could retain its independence!
The judges sum up, "For the reasons given above, the Tribunal unanimously decides as follows: (a) The Applicants are “persons aggrieved” within the meaning of section 120(1) of the Act (b) The Applicants’ application under section 120 of the Act is dismissed." The Merger Action Group tonight 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. At the end of the two day hearing, the MAG team expressed considerable confidence, believing they had got the better of the arguments before the three judges. Of course, the elephant never left the room, the Government, and it had a large secret dropping for the judges to consider in camera, the one (or is it two) secret dossier!
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. and its decision of whether or not to do so will be reported here as soon as possible! The MAG leaders said,"We have said from the start that, on behalf of many ordinary and concerned shareholders, account holders and employees, we felt we had to contest the decision to “rip up” competition rules in order to facilitate a takeover over which growing numbers of people – ordinary members of the public, bank customers, shareholders, businesses and politicians from across the divide – have serious concerns and doubts. We are all glad to have made the stand we did, and will continue to stand up for what we believe in. It remains our belief, shared by many, that allowing this proposed merger to go forward without due and proper consideration by the Competition Commission, sets a dangerous precedent. We did not embark lightly on this task. It has been onerous and at times highly charged, ranged as we were against the combined might of the Department of Business, Enterprise and Regulatory Reform (BERR), HBOS and Lloyds TSB. We pay tribute to the strength, determination and skill of all those who have taken part so far, who have made representations on our behalf and to the many shareholders, customers and business who have offered their support".