BT crown guarantee ruling under EU scrutiny

A spokeswoman for the EC’s directorate general for competition said the EC was “studying carefully” the UK court decision to decide whether it will challenge it on grounds of illegal state aid.

She said: “The Commission shall analyse the judgment and examine, in the light of the ensuing consequences, whether the UK authorities need to take specific measures.”

The UK High Court found that the government insures 98% of the pension scheme’s members against the company’s insolvency and not only the members hired before the company’s privatisation in 1984.

This means that under UK law BT could stop paying the Pension Protection Fund (PPF) levy it has been paying so far.

The PPF told schemeXpert.com: “Any scheme covered by a full crown guarantee is not eligible for the PPF [levy] as it is fully protected by the government. Such schemes therefore do not have to pay a PPF levy, except where the levy exemption is deemed a state aid.”

A BT spokesperson said the company is currently paying the levy, but “had to review any consequential impact of the judgment”.

In January 2009, the Commission established the exemption from the PPF levy payment granted to BT due to the crown guarantee constituted unlawful state aid.

It requested the UK recover “the relevant amounts”, but BT and the BT Pension Fund have challenged that decision before the EU General Court. No date for a ruling has been set yet.

The High Court ruling is expected to be appealed also at national level. The Department of Business said it was reviewing the judgement and taking legal advice on the matter.