BT pension fund pledge may fall foul of EC competition law

The European Commission is expected to scrutinise the controversial pension fund guarantee handed to BT by the Thatcher government when the telecoms giant was privatised.

BT revealed yesterday that about three quarters of its £36bn pension fund liabilities were underwritten by the government, under the terms of its 1984 privatisation.

Simon Holmes, partner in the EU and competition department at SJ Berwin, said that the so-called “Crown guarantee” could fall foul of European competition laws if it gives BT an unfair competitive advantage over its rivals.

Holmes said the pledge could win the company financial advantages, such as a better credit rating or better terms on loans, than rivals which do have not such a guarantee.

“This guarantee would seem to have many of the hallmarks of state aid,” he told The Times.

A spokesman for BT said that the company would reject any allegations of state aid “out of hand”.

www.btplc.com

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