British Telecom could be landed with a £16.6million Pension Protection Fund (PPF) penalty fine after the European Commission ruled that it had an "unfair competitive advantage" over levy payments.

The UK Crown guarantee that covers the pension liabilities of British Telecom plc on the EU telecommunications markets, and as a part of this guarantee BT is exempted from certain common law financial obligations, such as the payment of the PPF levy, since 2005.

An investigation was opened in November 2007, and the Commission has concluded that this exemption was an unfair advantage that constitutes state aid. This, the
Commission said, cannot be justified under EU rules because "it merely dispenses BT from charges that its competitors have to pay". The UK has therefore been ordered to recover the aid and pay it to the PPF.

"In the liberalised market of electronic communications, it is important to ensure that BT is subject to the same rules and obligations as its competitors to guarantee a level playing field and fair competition, so that consumers can benefit from high-quality services and competitive prices," said Competition Commissioner, Neelie Kroes.

Meanwhile, three more schemes have entered the PPF, resulting in a further 745 people around the UK now receiving or who will receive compensation.

Project Office Furniture plc Retirement Benefit Plan, Davies and Newman Pensions Plan and Newton Derby Ltd Pension and Life Assurance Scheme entered the PPF in January 2009.

The PPF now has a total of 291 schemes in its assessment period, and a total of 122,622 members.

- Pensions Age February 2009

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