BT Loses Battle Over EU Order to Repay U.K. Pensions Aid
By Stephanie Bodoni - Sep 16, 2013 6:10 AM ET
BT Group Plc (BT/A), the U.K.’s largest fixed-line phone company, lost its court fight against a European Union order forcing it to repay as much as 16.6 million pounds ($26.5 million) of exemptions from pension rules.
The EU General Court in Luxembourg today rejected BT’s appeal against the findings of a European probe that it benefitted from unlawful government aid.
The European Commission, the 28-nation EU’s antitrust regulator, concluded in 2009 that an exemption for the BT Pension Fund to contribute to the country’s Pension Protection Fund was unlawful state aid. The EU probe was started after one of BT’s competitors complained to the Brussels-based regulator.
The U.K. Pension Protection Fund was created in 2004 to guarantee pensions when sponsor companies go bankrupt and was financed by their contributions. BT’s exemption was created under a so-called crown guarantee at the time of its privatization in 1984 to protect the staff’s pensions.
“We are disappointed with the decision, which is not in the best interests of BT Pension Scheme members,” Dan Thomas, a spokesman for the company, said in an e-mailed statement. “We shall analyze the judgment in detail and decide upon next steps.”
“The commission’s adverse decision had already been implemented through changes to U.K. pension legislation prior to the General Court’s decision as required by EU law,” Thomas said. “The court’s decision maintains this status quo.”
The exemption gave an “unfair competitive advantage” to BT and amounts to unlawful state aid, the commission said.
The commission at the time said BT had already blocked an amount of 16.6 million pounds in an escrow account corresponding to the levies payable until 2008.
The cases are: T-226/09, British Telecommunications v. Commission, T-230/09, BT Pension Scheme Trustees v. Commission.
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