Provisional findings from Sky/ITV inquiry

Competition Commission provisional findings (130 pages, PDF plus appendices) on Sky's acquisition of a shareholding in ITV.

The Commission considered that Sky's ability to block special shareholder resolutions gave it an influence over ITV's ability to raise additional capital, and that this probably led to a substantial lessening of competition between Sky and ITV as the Commission thought that pay-TV subscriptions and free TV programming were competing products.

In a heavily redacted section, the report considers the theory that Sky's purchase of a stake in ITV lessened competition in pay-TV by preventing Virgin Media from merging with ITV, but:

4.114 ... whether such a scenario would have resulted in an increase in the overall competitive constraint on BSkyB would depend on the specific policies of the merged entity. For example, it is possible that by positioning some of ITV's existing channels as subscription channels, the constraint from [free to air] would have been weakened.

4.123 We conclude that there is unlikely to be [a substantial lessening of competition] arising from a loss of potential rivalry from a pay-TV offer developed or strengthened by ITV.

The report also dismisses concerns about plurality of news provision, bidding for sports rights, and advertising.

A summary (13 pages, PDF) was published on Tuesday 2 October 2007, together with the notice of possible remedies (3 pages, PDF). The mooted remedies are targeted on the strategic influence identified as the source of a potential lessening of competition: essentially a reduction in Sky's shareholding coupled with possible restrictions on voting and board representations.

Because the public interest clause in the Enterprise Act 2002 was invoked by the DTI in this case, any decision on remedies (which can only be made if the final report confirms an adverse effect) will be made by ministers rather than the Competition Commission. Appeals against the Commission's findings or any ministerial decision will be to CAT on a judicial review basis.

Short consultation period: Third-party responses by Monday 15 October 2007.

For further information or advice please contact Franck Latrémolière.

Filed under Competition Commission, Media.

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