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House of Lords Hansard
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21st Century Fox Takeover Bid for Sky: Timetable
20 December 2016
Volume 777

Statement

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My Lords, with the leave of the House, I will repeat a Statement made in the other place by my right honourable friend the Secretary of State for Culture, Media and Sport. The Statement is as follows:

“As honourable Members know, Sky Plc announced on Friday 9 December that it had received an approach from 21st Century Fox to acquire the 61% share in Sky plc which it does not already own, and I then made a Statement on 12 December about the proposed bid and the process that would need to be followed.

I recognise that this is an issue of significant interest to the public and has raised a lot of interest in Parliament, as well as being a significant issue for the parties concerned. It is very important that I make clear the role the Secretary of State will play in this process, which is a quasi-judicial one. The Secretary of State is able to intervene in certain media mergers on public interest grounds as set out under the Enterprise Act 2002.

Government guidance on the operation of the public interest merger provisions under that Act indicates how the intervention regime will operate in practice and the approach the Secretary of State will aim to take. The most important concern for me is that the integrity of that process is upheld. The guidance makes it clear that the Secretary of State will aim to take an initial decision on whether to intervene on public interest grounds within 10 working days of formal notification of the merger to the relevant competition authority. No such formal notification has yet been made.

Unless and until a formal notification is made to the relevant competition authority, the Secretary of State will not be taking any decisions in relation to the bid. It is for the parties to formally notify the relevant competition authorities. It is at that point that the Secretary of State will need to consider whether any of the public interests specified in the legislation merit an intervention being made. The Secretary of State’s decision on whether or not to intervene will be a quasi-judicial one, and it is important that she is able to act independently and that the process is scrupulously fair and impartial. Given that, it would be inappropriate for me to comment further on this proposed bid at this point in order that the integrity of the process is protected and that everyone’s interests are treated fairly.

But what I can say is that I and the Secretary of State understand the significant public and parliamentary interest there is in this matter, and we do not for a minute underestimate that. This is also clearly a significant issue for the parties to the bid. It is therefore crucial that the integrity of the process is protected. I will not be making any further comment on the process or the merits of the bid today. But I can confirm that this matter is being treated with the utmost seriousness and, should the parties formally notify the bid to the relevant competition authorities, the Secretary of State will act in line with the relevant legislation and guidance and in line with the quasi-judicial principles”.

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My Lords, I thank the noble and learned Lord for repeating the Answer to the UQ granted earlier in the other place. As I said last week—goodness, was it only last week?—the concerns of 2011 were not just about the serious wrongdoing uncovered by the phone-hacking scandal. They were also about the concentration of media power in fewer and fewer hands. I have no doubt that if this is referred, it will be referred successfully to the Secretary of State to act on the issues that have been raised.

More than 135,000 people have already signed an online petition calling for this bid to be referred, and the reasons for their concerns are the same as those which caused the previous bid to be abandoned in 2011. This all makes the kicking into touch of Leveson 2 and the suspension of authorisation of Section 40 look more than just a coincidence. I have two questions about process for the noble and learned Lord, which I hope will be sufficiently broad for him to be able to respond to despite his concerns about due process.

First, I note from his previous response that the Secretary of State will aim to take an initial decision on whether to intervene on public interest grounds within 10 working days of formal notification of a merger to the relevant authorities. Such formal notification has yet to be received, but it could happen—some would say it is highly likely to happen—over the holiday period. As there are a number of public holidays coming up, may I ask the noble and learned Lord to tell me precisely how many working days there are in the period of the Christmas Recess? To get him started with his calculation, I point out that the other place is not sitting tomorrow. If he needs more time to work this out, I am sure a letter would be sufficient, and I would be grateful if he could place it in the Library as well.

Secondly, there is the question of whether James and Rupert Murdoch—if they do acquire the balance of Sky—are fit and proper persons to be licence-holders of a regulated television service. The noble and learned Lord told the House last time that the Prime Minister had not discussed the bid at her recent New York meeting with Rupert Murdoch. He said—I think I paraphrase—that Mr Murdoch had apparently rolled up unannounced, something I am sure he is wont to do. Can we be assured that all such meetings with the parties are logged and published? Given that, last time round, it transpired that the then Secretary of State had set up a parallel, secret communications structure involving his special adviser and a similar person in News International, could the noble and learned Lord confirm for us who in the DCMS and elsewhere in Government have the authority to communicate with the parties? Will he publish a list of those so authorised, including civil servants and advisers, and put a copy in the Library?

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I am obliged to the noble Lord, Lord Stevenson. I do not have a calculation of working days over the Christmas vacation to hand, but I assure him that the 10-day period is a guidance period. It was originally formulated by the then DTI and will, if possible, be adhered to. If the noble Lord is seeking a precise calculation of working days over the Christmas period to the point when this House resumes, I will arrange for that calculation to be made and endeavour to ensure that it is set out in writing, with an appropriate copy being placed in the Library.

Regarding the fitness of persons who are to be involved in this matter, as I indicated on a previous occasion, the question of who is a fit and proper person is determined by Ofcom, pursuant to the Broadcasting Act 1990, albeit that one consideration that will arise under the 2002 Act is the Ofcom code of conduct in respect of broadcasting standards, as set out in the Communications Act 2003, and the need for a genuine commitment to adhere to those standards. I have no doubt that the Secretary of State will have regard to all relevant considerations when she comes to address the issue that she has to determine on a quasi-judicial basis.

There will be no question of special advisers being engaged in the process, and certainly not in the process of communication with any parties involved in this commercial transaction—of that—I can assure the noble Lord. That is not going to occur.

I am not aware of any further meetings scheduled between the Secretary of State and any of the parties to this transaction. If there were to be such a meeting, I have no doubt that notice of it would be given and a record kept.

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Does not the noble and learned Lord accept that the level of media plurality has barely changed in the UK since Vince Cable, the then Secretary of State for BIS, referred a similar takeover bid to the competition authorities in 2010? Does he not further agree that, this being the case, Mr Murdoch’s latest attempt at takeover should also be referred, as concerns about media plurality are still relevant today? Finally, I am sure that the noble and learned Lord remembers the Prime Minister’s conference speech, when she said that she would stand up to the rich and powerful on behalf of ordinary people.

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I am aware of the Prime Minister’s conference speech and, clearly, she will adhere to those sentiments. The present bid will be determined on its own merits and without reference to any precedents. It will be determined by the Secretary of State in a quasi-judicial manner with regard to its individual merits.

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My Lords, my noble and learned friend will recall that the public interest test on media mergers was inserted into the Enterprise Act 2002 by virtue, not least, of the work of this House, led principally by the noble Lord, Lord Puttnam, of Queensgate, through the medium of the Communications Act 2003. Therefore, this House has in that sense a stake in the decisions made under the public interest test on media mergers. I wonder whether my noble and learned friend, through the usual channels, might seek an opportunity for this House to take a view on these matters before the Secretary of State has to decide whether to intervene, bearing in mind that, while there is considerable competition and diversity in content provision, there is not such diversity in respect of ownership of platforms and the decisions made by platform owners in broadcasting.

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I am obliged to the noble Lord. Of course I appreciate that the relevant public interest test was incorporated into Section 58 of the Enterprise Act 2002, pursuant to the Communications Act 2003. However, the legislation is absolutely clear: the Secretary of State has to proceed to make a determination exercising a quasi-judicial function. Accordingly, it would not be appropriate to lay her decision-making process before either House before that determination is made.

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My Lords, the Minister has made much of the integrity of the process and the role of the Secretary of State in determining the public interest. Would not the public interest best be served by the Secretary of State asking Ofcom to make another “fit and proper person” assessment of James Murdoch, who by only a gnat’s whisker got away with being declared not fit and proper last time? The situation is relatively unchanged, except that we have had the conclusion of Leveson in the meantime.

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I am obliged to the noble Lord. I am not sure of the legal definition of a gnat’s whisker and therefore am not in a position to comment on the scope of the Ofcom outcome and its application to James Murdoch in those particular circumstances. Nevertheless, in so far as there is a relevant question of public interest, that is a matter for Ofcom, which will no doubt proceed as it is bound to in terms of the 1990 Act.

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My Lords, would my noble and learned friend care to comment on the role of the EU competition rules in this regard, as the proposed merger will strengthen the dominant position enjoyed by Sky News in the UK, Ireland, Italy, Germany and Austria, so there will be a very clear role for the European Union competition department? I should declare an interest: I spent a stagiaire—an internship—in what was DGIV in 1978.

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I am obliged to my noble friend. It will be a matter for the parties to determine the appropriate competition processes that will apply to this merger, and it will be for the Commission and the CMA to confirm when a formal notification has been made. I am aware that the 2011 bid from News Corporation, involving the acquisition of Sky Deutschland and Sky Italia, was both considered and approved by the Commissioner in terms of competition provision.

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My Lords, last week I asked the Minister whether the Government intended to follow the recommendations of Lord Leveson, in his recommendations 83 and 84, regarding the transparency of meetings between the relevant parties and government Ministers—in this case Murdoch executives. The Minister said at that time that the Government had no intention of following those recommendations. In response to the noble Lord, Lord Stevenson, however, he has just said that minutes will be kept of any such meetings and notice of those meetings will be given. Could he go that extra step and say to the House today that, in addition, the content of the matters discussed in such meetings will be made public?

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I have already indicated that, in the event of meetings between the Secretary of State and the parties prior to any determination being made, no doubt the existence of those meetings would be a matter of public record. I do not go further.