BSkyB is challenging the Competition Commission’s findings that its investment in rival broadcaster ITV constitutes a “merger” and must therefore dispose of the majority of its 17.9% shareholders.
The satellite giant will lodge its application with the Competition Appeal Tribunal (CAT) tomorrow (February 22), a month after the Competition Commission made its report.
Sky became ITV’s largest shareholder in November 2006 when its then chief executive, James Murdoch, spent £960m, stopping a putative £4.7bn bid for ITV by cable company NTL, now Virgin Media.
It is challenging the findings that a merger has taken place and that Sky’s investment prevents ITV from pursuing an independent competitive strategy. It further believes that even if the commission’s findings are “tenable”, divestment of its shareholding to a level below 7.5% is an “unreasonable” and “disproportionate” remedy.
Sky had offered to give up all voting rights in respect of its shareholding, which it says would have fully addressed concerns arising from Sky’s ability to vote on shareholder resolutions, but the measure was rejected by the Commission.
Chief executive Jeremy Darroch says the commission’s case is built on a series of “implausible hypotheses” and has recommended “an arbitrary remedy for a non-existent problem”.
He adds: “The reality is that competition in this marketplace is as vigorous as ever.”
The CAT 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.