The Competition Commission (CC) has concluded that BSkyB's acquisition of a 17.9% stake in ITV would allow BSkyB to have commercial influence over ITV's activities. The Secretary of State has accepted the CC's report and required partial divestment of BSkyB's stake.

The CC found that:

  1. there is likely to be a substantial lessening of competition in the 'all-TV' market (i.e. the combined pay TV plus free-to-air TV market) as BSkyB would be able to alter ITV's strategy in ways which might benefit BSkyB;
  2. there is no substantial lessening of competition in respect of the provision of news or advertising;
  3. BSkyB would though be able to exert an influence on ITV's news provision but regulatory controls and editorial independence would limit such influence;
  4. accordingly, whilst there was no immediate threat to the public interest, the fact that a substantial lessening of competition is likely, could mean that the acquisition, as a whole, may operate against the public interest.

The CC had therefore recommended to the Secretary of State that BSkyB's stake in ITV should be wound back to less than 7.5% and that BSkyB should undertake not to take representation on ITV's board.

On 29 January 2008, the Secretary of State announced that he had accepted the CC's recommendations.

In particular, the Secretary of State found that although the merger does not have an adverse public interest effect in relation to media plurality, it does operate against the public interest given that it is likely to result in a substantial lessening of competition.

The Secretary of State has not, however, published the period within which BSkyB will have to complete the divestment but has stated that draft undertakings will be published for consultation shortly.

Prior to the Secretary of State's decision and upon request of BSkyB, the Competition Appeal Tribunal (CAT) extended the period in which BSkyB can seek a review in relation to the CC's report such that BSkyB can, if it decides that it so wishes, – make a single application to the CAT to review both the CC's decision and the Secretary of State's decision.

BSkyB is understood to be considering whether to appeal and has four weeks to lodge such appeal from the date of the Secretary of State's decision. If an appeal is lodged this case could therefore yet take many months to resolve.

This case is interesting in that it touches on a number of complex issues, including the purality of the media and definition of the public interest. Further, it is a rare public interest merger reference in which the Secretary of State has jurisdiction to make a decision, in contrast with the majority of merger references which are decided purely on competition grounds by the OFT and the CC.