On 26 February 2007, I issued an intervention notice under section 42(2) of the Enterprise Act 2002 in respect of British Sky Broadcasting Group’s acquisition of a 17.9 per cent. stake in ITV plc. This meant that, in accordance with sections 44 and 44A of the Enterprise Act, on 27 April I received reports from the Office of Fair Trading on the competition effects of the transaction and from Ofcom on the effects of the transaction on the public interest consideration specified in the intervention notice. I am now required to take a decision under section 45 of the Enterprise Act on whether to refer the transaction to the Competition Commission for fuller investigation. I have decided to refer the transaction to the Competition Commission under section 45(2) of the Enterprise Act.
In reaching this decision I have had regard to the provisions of the relevant legislation and have given careful consideration to the reports I received from the Office of Fair Trading and Ofcom, including the summaries of the submissions made by the parties and by third parties that are contained in those reports. I have also considered carefully the additional representations my Department subsequently received from British Sky Broadcasting and have obtained advice from Ofcom under section 106B of the Enterprise Act on questions raised in those additional representations. In accordance with section 106B(3) of the Enterprise Act, Ofcom will publish this further advice to me.
The Office of Fair Trading’s report includes their decisions that:
(i) it is or may be the case that a relevant merger situation has been created as a result of British Sky Broadcasting Group’s acquisition of shares in ITV plc;
(ii) the creation of that merger situation has resulted, or may be expected to result, in a substantial lessening of competition such that further investigation by the Competition Commission is warranted; and
(iii) it is not appropriate to deal with the matter by way of undertakings in lieu of a reference.
I am bound by the Enterprise Act to accept these decisions.
The report from Ofcom includes their conclusion that, as a result of the relevant merger situation, there may not be a sufficient plurality of persons with control of the media enterprises serving the UK cross-media audience for national news and the UK TV audience for national news. They advise that this may be expected to operate against the public interest and that a fuller investigation of the matter by the Competition Commission is warranted. In accordance with sections 107(3)(b) and (ba) and 107(9)(a) of the Act, I am today publishing the reports I received from the Office of Fair Trading and Ofcom.
I consider the statutory thresholds for making a reference provided in section 45(2) of the Enterprise Act are met in this case in that I believe that it is or may be the case that:
(i) a relevant merger situation has been created;
(ii) the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition;
(iii) the public interest consideration mentioned in the intervention notice is relevant; and
(iv) taking account only of the substantial lessening of competition and the relevant public interest consideration, the creation of the situation operates or may be expected to operate against the public interest.
This decision to make a reference under section 45(2) of the Enterprise Act 2002 means the Competition Commission will, in accordance with section 47(2) of that Act, decide whether a relevant merger situation has been created, whether the creation of that situation has resulted or may be expected to result in a substantial lessening of competition and whether, taking account of the specified public interest consideration concerned, the situation operates or may be expected to operate against the public interest. Detailed investigation by the Competition Commission means the effect of the transaction on competition and media plurality will be examined in depth enabling substantive conclusions to be reached on the basis of all the relevant arguments and facts. Under section 51 of the Enterprise Act, the Competition Commission is required to provide a report to me within 24 weeks of the date of the reference, although it may extend this deadline by up to eight weeks if there are special reasons why this is necessary.