Scottish businessmen has launched a last-minute legal challenge to the merger of HBOS with Lloyds TSB, claiming that the Government’s approval of the deal was illegal.

The so-called Merger Action Group, which formed to make the challenge, claims that Lord Mandelson, the Business Secretary, waived competition rules to allow the merger without consulting properly on the decision.

The group, which is led by Malcolm Fraser, a businessman whose firm oversaw a £15m refurbishment of HBOS’s headquarters in Edinburgh, has submitted a 37-page application to the Commission Appeal Tribunal that argues that the deal should be referred to the Competition Commission.

Under the Enterprise Act, 'any person aggrieved' by a decision by a Secretary of State or the Competition Commission can request a review by the tribunal.

Sunday Telegraph