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United Kingdom: Competition Laws Waived to Allow Bank Merger

(Oct. 17, 2008) The Government of the United Kingdom is currently in the process of amending its competition laws to facilitate the proposed merger of two large banking establishments in the UK, Lloyds TSB and Halifax Bank of Scotland (HBOS). On September 17, 2008, the Secretary of State for Business and Enterprise issued an Intervention Notice to the Office of Fair Trading under the Enterprise Act 2002, to allow him/her to have the ultimate decision on whether the merger should be allowed. Currently, the Act allows the Secretary of State to intervene in mergers to protect legitimate public interest considerations, which are limited to national security and plurality of media ownership. The Enterprise Act also allows the Secretary of State to add new considerations by an Order, which is placed before Parliament and must be approved by an affirmative resolution by each House.

The Secretary of State has laid an Order before Parliament in connection with the current Intervention Notice which, if approved, will add an additional public interest consideration of “the stability of the UK financial system” to the Enterprise Act 2002. The merger will create a single bank that will be responsible for a third of the savings and mortgage market in the UK. Reports indicate that talks of the merger were at the highest level between Prime Minister Gordon Brown and the CEO of Lloyds TSB. (Enterprise Act 2002, c. 40, http://www.opsi.gov.uk/Acts/acts2002/ukpga_20020040_en_1 (last visited Oct. 10, 2008); The Draft Enterprise Act 2002 (Specification of Additional Section 58 Consideration) Order 2008, OPSI (Office of Public Sector Information) website, http://www.opsi.gov.uk/si/si2008/uksi_20082645_en_1 (last visited Oct. 14, 2008; Department for Business Enterprise and Regulatory Reform, The Creation of a New Public Interest Consideration on Stability of the UK Financial System, Oct. 7, 2008, available at http://www.berr.gov.uk/files/file48352.pdf; Siobhan Kennedy, Philip Webster, & Christine Seib, Lloyds TSB Agrees Merger with HBOS, THE TIMES (London), Sept. 17, 2008, available at http://business.timesonline.co.uk/tol/business/industry_sectors/banking_
and_finance/article4776447.ece
.)