It is not just the MAG which has concerns about the effects on competition in the UK.  Many others have raised similar concerns.

The Office of Fair Trading (Para 384, Page 97 - OFT Report of 24 October 2008 concerning the Merger)

"The creation of that merger situation may be expected to result in a substantial lessening of competition (SLC) within a market or markets in the United Kingdom for goods or services, including personal current accounts, banking services to small and medium enterprises, and mortgages, such that further inquiry by the Competition Commission (CC) is warranted."

Monster mash, The Economist, 25/09/08

"Other critics argue that had the authorities advanced the announcement of two decisions - extending the Bank of England's Special Liquidity Scheme designed to underpin the banking system, and suspending short-selling of financial shares - HBOS would not have needed to be rescued. […]

But the liquidity problems of a stand-alone HBOS could have been solved by Bank of England funding, says Alex von Ungern-Sternberg, who runs Euro-IB, an investment-banking boutique, since its mortgage assets, he believes, are of good quality. He wants HBOS shareholders and managers to vote to reject the merger."

Vince Cable, Treasury Spokesman for the Liberal Democrats, 8 November 2008
 
"The Lloyds takeover occurred because, at the height of the banking crisis several weeks ago, HBOS shares faced collapse.
 
The bank would have followed Bradford & Bingley and Northern Rock into public ownership with shareholders losing everything.  Lloyds offered a private sector solution limiting taxpayers' exposure and preserving the strongest part of both groups. The price to be paid was a loss of consumer choice since Lloyds's 1,645 branches and HBOS's 685 branches frequently overlap and many would have to close. A waiver from competition policy was agreed. I was one of those who saw the merger as the least bad of several unpalatable options.
 
The Government's bailout of the banks, or partial nationalisation, has radically changed the position. Lloyds, like RBS-Natwest as well as HBOS, now depends on government capital to survive. We are no longer talking about private sector solutions.  The issue is how to use vast amounts of public money to best effect. It is no longer clear that the Lloyds-HBOS merger is the best solution for the wider public or the banks, savers or borrowers, though it has obvious attractions to Lloyds management which has been able to acquire a competitor cheaply while being underwritten by public money."

Richard Wachman (Deputy Business Editor, The Guardian)

"When it was announced in September, the plan seemed like a neat way for HBOS to be rescued from oblivion. Brokered by prime minister Gordon Brown and his old friend Victor Blank, chairman of Lloyds, the merger would create a huge, new 'superbank' that in ordinary times would be banned under competition rules.

What is more, with HBOS's shares languishing, it was welcomed by the company's shareholders, fearful that if the bank was nationalised like Northern Rock, and later, Bradford & Bingley, they would see their investment wiped out.

But now that UK banks have been rescued by Brown with taxpayers' money, and with all their businesses able to operate with an implicit government guarantee, one wonders why this merger should proceed.

When the deal was unveiled, many of us were prepared to give ministers the benefit of the doubt as the creation of a huge new bank with a large slice of the savings and loans market was viewed as the lesser evil, given that HBOS was on the verge of collapse.

Today the situation is different: the government is ready to nationalise HBOS, making a private sector solution for its problems irrelevant.

So why create a bank that, in ordinary times, would be banned on the grounds that the concentration of too much power with too few banks is against the public interest?"

On 16 October, The Economist stated that "if the government [stood] ready to recapitalise all big banks, many question whether the takeover of troubled mortgage lender HBOS by Lloyds TSB, brokered by Mr Brown in September, need go ahead."

On 6 November, The Economist ("Call it off"), further argued that, six weeks after the announcement of the Merger, the economic circumstances surrounding the deal had changed, as the Government had "slung a £400 billion safety net under all banks". In its view, the proposed Merger should have been referred to the Competition Commission so that the competition concerns could be addressed and in the long run the banking sector would benefit from having more healthy competitors:

"When this crisis is over, the financial system will work better if a healthy number of competitors are still standing. A stand-alone HBOS preserved in the near term could find its own feet then, or be sold to a bidder with which there is less overlap."

The Financial Times editorial also noted on 10 November ("Investors should block HBOS deal") that the proposed takeover, which was conceived in the middle of the financial crisis some eight weeks previously, now looked "hasty, maybe even ill-judged". In its view, the Government's £400 billion rescue package for the banking industry "undermined the logic of a private sector deal that was supposed to avoid another nationalisation" and investors should question whether HBOS would be better off if it remained independent. The FT did recognise that an independent HBOS would probably require more funding than its current allocated share under the £17 billion to be invested in a merged HBOS/Lloyds and this higher government stake might take HBOS into national ownership. However, government ownership would allow a revitalised bank to be spun off later - the OFT came to the same conclusion in its report dated 24 October 2008.

The Scotsman, 26 November 2008 wrote the Treasury has shown an "unusual bias" in favour of the planned takeover of HBOS by Lloyds TSB, a former head of the Office of Fair Trading said yesterday.  Lord Borrie, director-general from 1976 to 1992, asked in the Lords : "Has not the government shown an unusual bias in favour of the merger? Firstly by passing regulations to ensure that financial stability can be an issue which would override the Office of Fair Trading's concern about competition and secondly by saying that the bail-out of the banks should be conditional on this merger going ahead?".