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BT exemption from PPF levy thrown out by European court

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EUROPE – The £41bn (€48.5bn) BT Pension Scheme, the UK’s largest, has seen multiple cases brought against the European Commission dismissed after a court ruled it should not be exempt from paying levy fees to the Pension Protection Fund (PPF).

In a case that concerned itself with the level of protection offered by the UK government should formerly state-owned BT ever become insolvent, the European General Court ruled that a “selective economic advantage” was previously offered in exempting the fund from the PPF levy on liabilities covered by the guarantee, also referred to as the Crown Guarantee.

In its judgement in cases T‑226/09 and T‑230/09, the court notes: “BT claims, admittedly, that since its pension scheme does not come under the PPF, it is not required to pay a levy to that fund.

“That, in its submission, arises from the overall system for pension protection established in the United Kingdom, not as a result of ‘a selective advantage’ granted to BT.”

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However, it adds: “In the present case, it is common ground that the measure at issue was not notified to the Commission, which became aware of it after a complaint was lodged by a competitor of BT, and that the measure entered into force and was put into effect without being authorised by the Commission.

“Consequently, the aid granted under the measure at issue was not granted in accordance with the procedure laid down in Article 88(3) EC.”

Ruling on the Commission’s decision that the Crown Guarantee was “incompatible with the common market”, as it amounted to state aid, the court rejected BT’s arguments that the Commission had inadequately explained how levy exemption would distort competition.

Commenting on the ruling, a spokesman for BT said: “The Commission’s adverse decision had already been implemented through changes to UK pension legislation prior to the General Court’s decision as required by EU law.  

“The Court’s decision maintains this status quo. Annual levies for Crown Guarantee protection will continue to be paid by the trustee to the PPF from scheme funds.”

Neelie Kroes, at the time competition commissioner, ordered the PPF levy exemption to end in 2009.

Kroes, who has since been named commissioner for the European digital agenda, said at the time: “In the liberalised market of electronic communications, it is important to ensure BT is subject to the same rules and obligations as its competitors to guarantee a level playing field and fair competition, so consumers can benefit from high-quality services and competitive prices.”

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