Abbey National takeover may be blocked
The British Competition Commission says it will consider vetoing the planned takeover of Abbey National by Lloyds TSB Group should it find that the proposed deal is against public interest.
Other options would include requiring the divestment of branches to competing financial service providers in areas where Lloyds and Abbey National have a high share of the market; or the sale of any of the existing businesses of either Lloyds or Abbey National.
The commission said it may also call for steps to improve customers' awareness of the terms of the products they are buying from the enlarged group, and how those terms compare with those available from competitors.
An inquiry into Lloyds' proposed hostile bid for Abbey National is continuing, and the commission said it has identified a number of issues that it wishes to consider.
It plans to discuss these issues with both Lloyds and Abbey National after Easter.
Among the issues to be addressed is whether the merger would significantly reduce competition and, if so, whether there would be adverse effects for the public interest as a result.
Adverse effects might take the form of higher prices; lower quality of service to customers; a narrower range of customers served; reduced choice of products and of providers; and a reduced rate of innovation.
The commission said it will also wish to consider a number of factors relating to barriers faced by new entrants to the market.
These would include the importance of a branch network to entrants; the difficulty of establishing such a network; and the potential role of the Post Office as an alternative to conventional branches.
It also wishes to discuss whether Abbey National has acted as a constraint on the UK's four major banks and, if so, to what extent.
The commission, which recently held an open hearing into the proposed takeover, emphasised that it has not yet reached any conclusions as to what decision it will take on the deal.
