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    Wednesday, 3 October 2007

    Fall out from BSkyB

    Chairman of the Competition Commission has been widely reported as indicating a preference for a sale of shares by Sky as the putative remedy to the provisional competition problem identified by the Commission yesterday. This should be read as a general preference, rather than something specific to this case. The notion is that behavioural remedies require ongoing surveillance and therefore increase the regulatory burden. The Commission is bound, however, only to intervene to the extent necessary and so if BSkyB can make a reasonable case that it will be true to its word behavioural remedies it will be (eg coherence with Chairman's action on major votes). Sky might yet have the last laugh over the crowing Branson. The OFT would nonetheless have residual powers to review the effectiveness of the remedy agreed.

    It also reported that a non-executive director of the company has mooted legal action to seek redress if it is forced to sell. This is a nonsense. The argument goes that Sky adhered to the letter of the law by not exceeding the 20-20 media ownership rule, and so shouldn't now have the rug pulled from under it. The obvious problem is that two different areas of law apply to transactions of this sort, and one can't pick and choose that by which one will be bound. It would always be open to Sky or others to lobby the government for a change to the framework as it stands, but failing that...

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