A recent judgment of the UK Competition Appeal Tribunal (CAT), dismissing an appeal by BSkyB (the UK’s largest pay TV provider), has upheld a decision of the Secretary of State of January 2008 (implementing a Report from the Competition Commission) that BSkyB’s acquisition of a 17.9 percent shareholding in ITV (a UK national terrestrial television broadcaster) would give rise to adverse effects on competition. The CAT held that the CC had been entitled to find in its Report that the acquisition constituted a relevant merger situation, on the basis that it granted BSkyB the ability to exert material influence over the policy of ITV, and that it would lead to a substantial lessening of competition. The judgment supported the CC’s approach to the consideration of material influence, finding that BSkyB had identified no defect that would render the findings perverse or irrational.
The CAT did, however, find that the CC had incorrectly applied the plurality of the media public-interest consideration in finding, in this regard only, that the acquisition would not be expected to operate against the public interest. The judgment provides interesting analysis of the media plurality public interest consideration, this being the first time that the Secretary of State has intervened in a merger on this (or any other) ground since the Enterprise Act gave decisionmaking authority to the OFT and CC. The CAT held that the Commission ought to have treated BSkyB and ITV as wholly controlled by only one person, and treated the fact that, in practice, BSkyB shares control over ITV with others as irrelevant for the purpose of the plurality assessment.
This case is also noteworthy for the fact that the CAT went on to consider separately in a second judgment whether to remit the media plurality question back to the CC and Secretary of State. It held that the remedy imposed (requiring BSkyB to reduce its shareholding to 7.5 percent) was not undermined by the Report’s deficiency in relation to the plurality issue, and that remitting the plurality issue to the CC and Secretary of State would therefore serve no useful purpose: it could not result in any lesser remedy being considered appropriate as the reduction in shareholding was still necessary to remove the adverse effect on competition; further, there was no realistic prospect of any additional or different remedy being imposed, as the existing remedy would also be sufficient to remove the effects of the transaction on the plurality of media owners. The CAT has refused BSkyB permission to appeal its decision, but leave to appeal may still be sought directly from the Court of Appeal.