The group of businessmen trying to halt the Lloyds-HBOS merger yesterday welcomed a successful preliminary hearing at the Competition Appeals Tribunal.
The ad hoc Merger Action Group (MAG) has achieved a full hearing of its case by the tribunal in London next Monday under Scots law, which would mean any appeal would go to the Court of Session. The tribunal said time was too short for its hearing to be staged in Edinburgh.
The legal process, already speeded up by limiting consultation to 24 hours earlier this week rather than the normal two to three weeks, will be completed by the following day, the tribunal said, two days before HBOS shareholders vote on the government-brokered merger.
The action group said it was "confident" of a favourable decision by the tribunal, which has the power to refer the merger to the Competition Commission, or make recommendations of its own.
A referral, or an appeal against its decision, could possibly lead to the merger timetable being derailed and the shareholder vote postponed.
MAG's case is that Business Secretary Lord Mandelson's approval of the merger without reference to competition law was unlawful, as he had been "fettered" by an earlier decision of the Chancellor and Prime Minister.
Further, "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 promoted 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 group says.
Finally, it argues that the government rescue package for the banking system overtook Mandelson's justification that "if this specific merger did not take place HBOS would collapse and destroy stability in the financial system".
HBOS has said the case is a distraction and has "no merit".
Counsel for Lord Mandelson, for HBOS, and for Lloyds TSB, all called for a quick judgement in the case.
The chairman said there were three possible outcomes -an instant judgement, an instant decision without reasons, or no quick decision. He rejected a plea by Mandelson's legal team that the appeal be heard under English Law.
MAG spokesman Malcolm Fraser said: We are delighted that the tribunal recognises the serious and responsible nature of our claim and that the case clearly has merit.
"The UK 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. Our primary concern - as recognised by the OFT report - is that the government ripped up the competition laws to allow this shotgun wedding to go ahead."
Among MSPs expressing support for the campaign have been the SNP's Alex Neil, Tavish Scott the Scottish Liberal Democrat leader, and independent Margo MacDonald. It now claims backing from 500 business people and shareholders, led by property entrepreneur Dan Macdonald and financiers Tim Noble and Peter de Vink.
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