Government consults on proposals to reduce Sky stake in ITV

Government consults on proposals to reduce Sky stake in ITV

London, 2 January/GNN/ --

DEPARTMENT FOR BUSINESS, ENTERPRISE AND REGULATORY REFORM News Release
(2009/01) issued by COI News Distribution Service. 2 January 2009
Competition Minister Gareth Thomas today published for consultation draft
statutory undertakings which, if accepted, would require Sky (British Sky
Broadcasting Group plc) to divest a proportion of its shares in ITV.

In January 2008, the Secretary of State announced his decision that Sky's
shareholding in ITV should be reduced in order to remedy the substantial
lessening of competition the Competition Commission had found arose from
Sky acquiring 17.9 per cent of ITV shares.

The undertakings would require Sky to:

- Divest shares in ITV to a level below 7.5 per cent;
- Agree not to sell shares to persons associated with Sky/News Corporation;
- Agree not to seek or accept representation on the ITV Board; and
- Agree not to reacquire shares in ITV.

Following the Secretary of State's announcement, Sky has sought to appeal
the decision via the Competition Appeal Tribunal and Court of Appeal. The
Department for Business is today commencing the necessary consultation on
these draft undertakings to ensure swift implementation of the remedies
should the Secretary of State's decision be upheld by the Court.

The Department is inviting interested parties to submit views on the draft
undertakings by Friday 23 January 2009.

Notes to editors
1. The draft undertakings can be found on the BERR website at:
http://www.berr.gov.uk/whatwedo/businesslaw/competition/mergers/public-interest/broadcasting/index.html

2. On 17 November 2006, Sky announced it had acquired 696 million shares,
representing 17.9 per cent of ITV shares. On 26 February 2007, the Secretary
of State for Trade and Industry issued an intervention notice to the OFT
under the Enterprise Act 2002, stating he believed it was, or could be,
the case that the Act's public interest consideration was relevant to this
transaction. The Secretary of State also asked Ofcom to prepare an initial
report on possible public interest issues.

3. On 24 May 2007, having considered the OFT and Ofcom reports, and other
representations, the Secretary of State announced his decision to refer the
acquisition to the Competition Commission for investigation. The Secretary
of State received the final investigation report on 14 December 2007. This
was published on 20 December.

4. On 29 January 2008 the Secretary of State for Business and Enterprise
announced his decision to make an adverse public interest finding and to
adopt the remedies recommended by the Competition Commission. These included
partial divestiture of Sky's shares in ITV to a level below 7.5 per cent
within a specified period. The Secretary of State accepted Sky's request
not to make that period public, and this information is redacted from
the undertakings. BERR officials have received details of the alternative
methodologies by which Sky proposes to sell the shares, which are not being
made public in view of the scope for this information to harm Sky's legitimate
business interests.

5. On 22 February 2008, Sky appealed to the Competition Appeal Tribunal
(CAT) for a review of both the Secretary of State and Competition Commission
decisions. An oral hearing took place in June. The CAT handed down its
judgement on 29 September and Sky subsequently applied for permission to
appeal the judgement. On 4 December, the CAT issued a ruling refusing Sky's
request. On 18 December, Sky submitted a renewed application for permission
to appeal direct to the Court of Appeal. It is anticipated that the Court
will consider this application early in 2009.

6. Final undertakings must be published for consultation at least 15
days before they can be accepted. Consulting now, without prejudice to
the outcome of the current application, is intended to avoid any delay in
accepting undertakings should this be appropriate following the Court of
Appeal's determination.

7. Representations on the draft undertakings should be submitted in writing
by Friday 23 January 2009 to: Paul Bannister, Consumer & Competition Policy
Directorate, Department for Business, Enterprise & Regulatory Reform, 1
Victoria Street, London SW1H 0ET or by e-mail to paul.bannister@berr.gsi.gov.uk

Department for Business, Enterprise & Regulatory Reform
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Source: Department for Business, Enterprise and Regulatory Reform

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