The takeover of Halifax Bank of Scotland could be blocked within weeks after the Competition Appeal Tribunal confirmed it will hear a challenge to the move.
A group of Scottish businessmen have mounted the challenge against the controversial takeover by Lloyds TSB.
The Merger Action Group lodged an appeal with the competition tribunal last week, claiming the decision by UK Government Business Secretary Lord Mandelson to allow the merger was “unlawful”.
The tribunal usually takes three weeks to decide whether to hear an appeal but yesterday it broke with convention to confirm it will hear the case.
A “case management conference” involving lawyers from both sides will be held in London tomorrow but the group is hoping the appeal will be heard in Scotland.
Spokesman Malcolm Fraser, an Edinburgh architect, said: “Clearly, given the speed at which this process is now moving, the government is taking this very seriously.
“Although the case conference is being held in London we are still pushing the case that the appeal hearing itself should be held in Edinburgh, given that we as appellants are Scottish and HBOS and Lloyds TSB are both Scottish-registered companies.”
The government approved the takeover on October 31 after over-ruling competition concerns by the Office of Fair Trading. Lord Mandelson said the public interest of “preserving the stability of the financial system” outweighed potential anti-competitive effects.
Lloyds TSB shareholders backed the deal at a meeting in Glasgow on November 19. HBOS shareholders are expected to make their decision on December 12.
The group’s case against Lord Mandelson is based on three key points, the first being that the minister is obliged to keep an open mind when making his decision.
It claims statements made by Prime Minister Gordon Brown and Chancellor Alistair Darling in September “fettered” the minister to keep an open mind in making his decision.
They say that instead of using legislation in place at the time of the merger as the justification for not referring the merger, he created new laws, retrospectively giving powers to himself not available at the time the merger was announced.
And they claim that, although the decision was based on the theory that a HBOS collapse would destroy stability in the financial system, this was no longer the case following the government rescue package.