Sky v Government and Virgin (ITV stake) [2008] CAT 25

Competition Appeal Tribunal judgment (102 pages, PDF) in the appeals by BSkyB and by Virgin against the ministerial decision ordering Sky to reduce its shareholding in ITV plc, and the underlying Competition Commission report.

Sky lost. The Competition Commission and ministers (who followed the Competition Commission's advice) largely won.

The Tribunal rejected all of Sky's arguments against the finding that there was a merger situation because its likely ability to use its 17.9 per cent share to block some shareholder resolutions, the finding that this limited form of control gave rise to a substantial lessening of competition in television broadcasting, and the rationality and proportionality of the remedy to reduce its shareholding to 7.5 per cent (calculated as a share unlikely, on the Competition Commission's assumptions about shareholder behaviour, to enable Sky to block a special shareholder resolution).

The Tribunal also accepted a point by Virgin, against Sky, that the limited control of ITV strategy that Sky was found to have with its stake should have been taken into account as a potential loss of plurality. This point rests on the construction of the plurality issue in the Communications Act 2003. The question of whether this finding has any practical impact is deferred to further debate between the parties.

The Tribunal rejected Virgin's attempt at treating Sky's ability to frustrate a take-over of ITV with a 7.5 per cent share as relevant to the specification of the remedy.

For further information or advice please contact Franck Latrémolière.

Filed under BSkyB, CAT, Competition Commission, DTI/BERR, Media, Merger control.

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