Fox Sky bid referred to EC
March 16, 2017
By Colin Mann
Karen Bradley, the UK Secretary of State for Culture, Media and Sport, is to refer 21st Century Fox’s bid to acquire the 61 per cent of pay-TV operator Sky it does not already own to Ofcom and the Competition and Markets Authority.
In a formal Intervention Notice, Bradley said that she had grounds for suspecting that, as a result of the proposed acquisition, it is or may be the case that:
(a) arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation as defined in section 23 of the Enterprise Act 2002 (“the Act”) in that:
(i) two or more enterprises will cease to be distinct; and
(ii) the value of the turnover in the United Kingdom of the enterprise to be taken over exceeds £70 million;
(b) a concentration with a Community dimension (within the meaning of Council Regulation (EC) No 139/2004 (“the EC Merger Regulation”), or a part of such a concentration, has thereby arisen or will thereby arise
In accordance with articles 4 and 4A of the Enterprise Act 2002 (Protection of Legitimate Interests) Order 2003, the Competition and Markets Authority and Ofcom respectively are required to investigate and report by midnight May 16th 2017.
Ofcom has published a guidance note setting out the process and timetable for preparing its report on the public interest considerations set out by the Secretary of State. Ofcom has also published an invitation to comment and invites written submissions to be sent to Ofcom by March 30th 2017.
Ofcom’s fit and proper duty
Under s.3(3) of each of the Broadcasting Act 1990 and the Broadcasting Act 1996, Ofcom has an ongoing duty to be satisfied that the holders of broadcast licences are fit and proper to be licensed. This means that it can assess a licensee at any time, on its own initiative, as well as being able to respond to concerns raised by third parties. It has powers to require from licensees any information that it considers appropriate to conduct that assessment.
The public interest test that Ofcom has been asked to make by the Secretary of State and our ongoing duty under the Communications Act to assess whether a licensee is fit and proper are separate legal processes. However, the issues it has been required to consider in the public interest test may overlap with its own consideration of Sky’s fitness to hold broadcasting licences in the event of a change of control. It proposes to consider these matters within the same timeframe within which Ofcom will report to the Secretary of State on the public interest test.
Fox said in a statement: “We are confident that a thorough review of our track record over 30 years will underscore our commitment to upholding high broadcast standards, and will demonstrate that the transaction will not result in there being insufficient plurality in the UK, pointing out that the media market had changed dramatically in recent years, as has its business. “We believe our proposed £11.7 billion [€13.5bn] investment will benefit the UK’s creative industries,” it concluded.