Sky Confirms Legal Challenge To ITV Share Ruling
BSkyB has confirmed it will launch a legal challenge against the competition regulator’s ruling ordering it to sell the majority of its 17.9% stake in ITV.
Sky, which will lose hundreds of millions of pounds selling down the stake to below 7.5%, said it would lodge its application with the Competition Commission tribunal (CCT) today.
The satellite broadcaster intends to challenge “key conclusions” of the Competition Commission’s report recommending the sell-down of its ITV stake.
This recommendation was subsequently backed by John Hutton, the secretary of state for business, enterprise and regulatory reform, at the end of last month.
“The CCT has the power to quash part or all of the previous findings and to send the case back to the Competition Commission for further consideration,” Sky said in a statement.
Sky has been ordered to reduce its stake in ITV because the commission concluded it represented a “substantial lessening of competition” (see Sky Told To Reduce ITV Stake To Below 7.5%).
The satellite broadcaster has maintained that the remedies it has tabled, including offering to put all of its ITV voting rights into a blind trust, would be sufficient to deal with the competition regulator’s concerns.
“We believe fundamentally that companies have a right to invest within a transparent framework of competition law,” said Sky’s chief executive, Jeremy Darroch.
“The Competition Commission has failed to meet the burden of proof required to justify its conclusions. It has built its case on a series of implausible hypotheses and has recommended an arbitrary remedy for a non-existent problem.”
Sky intends to challenge the Competition Commission’s findings on two points in particular.
Firstly, Sky will contest the verdict that its £940 million November 2006 acquisition of the 17.9% stake has prevented ITV from “pursuing an independent competitive strategy” and that a “merger between ITV and Sky has taken place”.
In addition Sky will argue that the order to reduce the stake to less than 7.5% is an “unreasonable and disproportionate remedy to the Competition Commission’s specific concerns”.
Sky said that reaching such a remedy was “all the more unreasonable and disproportionate” in light of its offer to give up all voting rights, which it added “would have addressed fully the Competition Commission’s stated concerns arising from Sky’s ability to vote on shareholder resolutions”.
“The reality is that competition in this marketplace is as vigorous as ever,” said Darroch. “A merger has not taken place – Sky and ITV are distinct entities with independent strategies and Sky could not block a shareholder resolution without voting rights.”
BSkyB: 020 7705 3000 www.sky.com