Outlook: Thomson break

FINALLY SOMETHING has gone right at Thomson Travel, the holiday company that has been a walking accident in the last 12 months. Having issued three profits warnings and thrown both its chairman and chief executive overboard, Thomson actually secured a victory yesterday.

Unfortunately consumers are unlikely to notice the difference, and neither are the group's long-suffering shareholders. What Thomson's legal triumph over the Department of Trade and Industry does do is cast the government ministry in a very poor light indeed.

The Court of Appeal ruled that the DTI over-reached its remit and had no power to make a statutory order restricting certain deals between tour operators and travel agents. It all looks hugely embarrassing for the secretary of state at the time, namely Margaret Beckett.

All this dates back to 1997's investigation into the travel industry by the Monopolies and Mergers Commission (now called the Competition Commission). Though the MMC declared the industry "broadly competitive", to the consternation of everyone other than those working in it, the MMC did recommend banning certain practices such as the tying of holiday discounts to the purchase of insurance. For reasons known only to itself, the DTI broadened the restrictions to ban a host of other practices such as the payment by tour operators for sole poster displays in travel agents.

The problem was that the order was drafted so poorly that no one in the industry was ever sure what was included and what wasn't. Consequently the Court of Appeal has found in favour of Thomson on all the points it raised. Lord Justice Laws even went as far as to say that the DTI's order "could not possibly have been conformed to."

The move sets a legal precedent as this is the first time a judicial review has overturned a ruling by the DTI. With the Competition Commission's report on the car industry due to land in January, Stephen Byers, the present Trade Secretary, will have to be on his mettle. Meanwhile, Thomson will be hoping the ruling marks a much needed turning point in its fortunes.