On 24 May 2007, my predecessor referred British Sky Broadcasting Group plc's acquisition of a 17.9 per cent stake in ITV plc to the Competition Commission under Section 45(2) of the Enterprise Act. This meant that the Competition Commission was required to undertake an investigation and to provide a report on the effects of the transaction on competition and also on its effects on the public interest consideration specified in the reference. This was the consideration set out in Section 58(2C)(a) of the Enterprise Act relating to the need, in relation to every different audience in the United Kingdom, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience.
I received the Competition Commission's final report on this matter on 14 December 2007 and published it on 20 December 2007. That report contains the Competition Commission's decisions on:
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 within any market of the United Kingdom; and
whether, taking account only of any substantial lessening of competition and any admissible public interest consideration, that situation operates, or may be expected to operate, against the public interest.
The Competition Commission is also required to recommend appropriate remedies to address any effects it finds are adverse to the public interest.
The Competition Commission has decided that a relevant merger situation has been created and that it results in a substantial lessening of competition in the UK market for all television. I am required, under Section 54(7)(a) of the Enterprise Act, to accept these decisions. The Competition Commission has concluded that the transaction is not likely to result in effects adverse to the public interest as it relates to the public interest consideration specified in the reference. Accordingly, the Competition Commission has concluded that, overall, the transaction may be expected to operate against the public interest.
The Competition Commission has concluded that two remedies would be effective in addressing the substantial lessening of competition arising from this merger. These are: (i) full divestment of the whole of BSkyB's shareholding; and (ii) partial divestment with BSkyB being required to divest its shares down to a level below 7.5 per cent combined with undertakings not to seek or accept representation on ITV's board and not to re-acquire shares in ITV. The Competition Commission has recommended the second of these on the grounds that partial divestment is less intrusive than full divestment and is, therefore, a more proportionate remedy.
I am now required to decide:
whether to make no finding at all in the case—which I can do only if I decide that the public interest consideration specified in the intervention notice is not relevant to a consideration of the merger situation concerned (in which circumstance, the case would return to the Competition Commission for it to take final decisions); or
whether to make an adverse public interest finding—noting that in reaching a decision on this, I am required by Section 45(6) of the Act to treat any anti-competitive outcome as being adverse to the public interest unless the outcome is justified by a relevant public interest consideration; and
what action should be taken to remedy, mitigate or prevent any of the effects adverse to the public interest that may result from the relevant merger situation. In reaching this decision, it may be noted that under Section 55(3) of the Enterprise Act, I am required in particular, to have regard to the Competition Commission's report and its recommendations on appropriate remedies.
I have today published my decisions in this case which are as follows:
The public interest consideration specified in the intervention notice set out in Section 58(2C)(a) of the Act is relevant to a consideration of this case—meaning that I am required to make a finding in this case.
I accept (as I am bound to) the Competition Commission's decisions that a relevant merger situation has been created and that it results in a substantial lessening of competition in the UK market for all television.
I accept the Competition Commission's conclusion that the transaction does not have an effect adverse to the public interest as it relates to the public interest consideration specified in the intervention notice—that being the one identified in Section 58(2C)(a) of the Enterprise Act relating to the sufficient plurality of persons with control of media enterprises.
The transaction operates against the public interest taking account of the substantial lessening of competition within the UK market for all television.
I find that, in accordance with the Competition Commission's recommendations, the following remedies should be imposed—partial divestment of BSkyB's shares in ITV down to a level below 7.5 per cent combined with undertakings not to seek or accept representation on ITV's board, not to divest the shares to an associated person and not to re-acquire shares in ITV.
In reaching my decisions in this matter, I have had regard to the provisions of the relevant legislation and have given careful consideration to the report I received from the Competition Commission, including the annexes to the report and 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 both the principal parties and from third parties. In relation to the appropriate time period within which the necessary divestment of shares should be completed, I considered the representations made to me, together with the recommendation on this matter contained in the Competition Commission's report sent to me on 14 December. My decision on this matter is consistent with the Competition Commission's recommendation which was excised from the published version of the report.
Under Section 120 of the Enterprise Act 2002, any person aggrieved by this decision has four weeks within which to apply to the Competition Appeal Tribunal for a review of the decision.
I have separately decided to accept a request from BSkyB not to disclose to any party other than BSkyB the period of time within which the necessary divestment of shares is to be completed. BSkyB argued that wider disclosure of this information was not necessary and could be unduly prejudicial to their legitimate commercial interests. ITV argued conversely that the period should be made public. On balance, having consulted the Competition Commission and the Office of Fair Trading about their practice in similar cases and recognising there are arguments on both sides, I have decided it is right not to disclose the information. The specified divestment period will begin from the date that suitable divestment undertakings are finalised.
I have placed a copy of the full decision document in the Library of the House.