BSkyB's ITV share acquisition sees referral to Competition Commission

Both the Office of Fair Trading (OFT) and Ofcom have concluded that the acquisition of shares by BSkyB in ITV should be referred to the Competition Commission for further investigation. A referral to the Commission will now take place. The only query is whether it will be asked to look at the wider public interest issues alongside the competition questions.

Under the Enterprise Act 2002, it is normally for the OFT alone to make an initial assessment of the ramifications of a proposed or completed merger situation on competition in relevant markets. After the Secretary of State (for trade and industry) intervenes in a media industry merger, however, the OFT must report to him. Ofcom must also advise him on whether wider public interest problems of quality, diversity or pluralism have arisen (Ofcom will often conduct a separate assessment of whether the licence of any party to the merger should be amended on a change of control). It is then for the Secretary of State to decide whether the merger should be referred to the Commission. The Secretary of State is obliged to follow the OFT's view on the competition question, but can reject Ofcom's perspective on the public interest issues (and refer or not refer contrary to the advice received). This is the first time that this mechanism, introduced by amendment to the Enterprise Act through the Communications Act 2003, has been deployed.

The statement published by the OFT is thin on detail, and we must wait for publication of its advice (normally a few weeks after the decision is announced) before gaining an insight into the specific markets in which it believes problems have arisen. For the meantime, the OFT concluded that BSkyB had obtained a 'material influence' over ITV; that a substantial lessening of competition may be expected, and that a straightforward remedy had not been found.

On the first question, it is worth noting that a 17.9% holding without board representation is a comparatively low figure for a finding of influence. On the second question, the OFT indicated that the partial ownership link raises significant competition concerns, especially as we approach digital switchover, as it means that ITV is no longer fully independent. It also suggested that the number of consumers potentially affected - tens of millions - supported the need for further consideration.

Ofcom's published statement is equally lacking in detail. In a five sentence release, it indicated that "there are public interest issues, in relation to sufficient plurality of news provision for both cross media and television news in the UK". It has undertaken to publish its full advice by the time the Secretary of State announces his decision on referral. This is scheduled to happen on 26 May.

I'm due to flesh out my intuitions on the utility of the public interest adjunct to the merger control regime in a seminar at Queens University, Belfast next week and will post a summary of those reflections on here. For the meantime, the title - 'An Affective Disorder?: Public Interest Intervention in Media Mergers' - should offer an inkling of my perspective.

(Temporary) Stasis for Irish Defamation and Privacy Bills?

Cearta.ie has an interesting note on one ramification of the calling of the Parliamentary election in the Republic of Ireland. This is the fact that the Defamation and Privacy Bills will now fall, unless rejuvenated by the incoming Parliament. A corollary point made concerns the impact that this development will have on the emergence of the self-regulatory Press Council and Ombudsman that were to be established in conjunction with the new law.

Paps vs Celebs - the ultimate spectator sport

Hugh Grant made the papers at least twice in the last week, first for an alleged attack on a paparazzo and then having won a libel action against the Daily Mail. On the back of this, Greenslade has an interesting post with comments, while both Stephen Glover in the Independent and Jim White in the Telegraph 'join the fray' with interesting takes.

'National champions' ride again?

Its reported in a number of newspapers this morning that Telecom Italia is to be taken over by a consortium of Italian and Spanish companies with the result that it will stay under 'Italian' control (1,2). The company had been subject to interest from US firms AT&T and America Movil, and its future has been at the centre of a political storm in Italy.

So far, so what? Well the point of interest is that the move seems to have come on the back of ministerial intervention, and provides another example of European politicians' interference in corporate ownership in the attempt to defend perceived strategic interests. The Guardian article cites the chairman of Generali - an Italian insurer involved in the consortium - as saying that he had joined the consortium after a call from the finance minister (Tommaso Padoa-Schioppa): "I told him we do insurance, not telephones, but that if it was necessary to defend the Italian-ness of Telecom, we were ready... I hope that the government would behave in the same way if - God forbid - it was necessary to defend the Italian-ness of Generali".

The creation of 'national champions' is sometimes seen as the only way for firms based in a particular country to compete in a global market populated by giant competitors. It is considered particularly important in respect of industry sectors that are deemed strategically important. Notably, the approach tends to benefit firms that are already large with well-established political connections. The social welfare implications of the decline or failure of such firms can leave it difficult for politicians to resist supportive intervention. Commissioner Kroes - the Competition Commissioner - has acknowledged that “in difficult times, it is sometimes appealing to launch ideas about champions and sectoral initiatives”.

The problem is that this approach runs counter to the premises of European integration (albeit that here the perceived shark was non-EU). Its something I've written on previously in the context of energy industry mergers (see [2006] Journal of Business Law, 619-630). The countervailing view is that firms that operate in competitive national markets are more likely to be efficient and thus able to flourish on more competitive global markets than contemporaries that are insulated from competition on home markets.

Given this belief, the grant of support to national champions is perceived as pathological. For Professor Geroski (the late Chairman of the UK Competition Commission) “it is competitive markets that produce such champions, not national governments… national champions are more likely to become national basket cases than national breadwinners”. Ms Kroes concurs that “vigorous competition at home represents the best industrial policy... when industrial policy turns inwards, when protectionism leads to economic isolation, the consequence is diminished growth, stagnation and lost prosperity”. The consensus among other commentators confirms this attitude: “no industrial policy has been more comprehensively discredited than the notion that the best way to achieve competitiveness abroad is to suppress it at home”; “in the end, a possibly well meaning policy designed to nurture the sunrise sectors of the future ends up propping up the sunset sectors of the past, littering the industrial landscape with dinosaurs whose ability to compete for political patronage turns out to be far superior to their ability to compete in their own markets” (John Kay - Financial Times, 11 January 2005).

We may hear more on this...

Panorama at risk of suit for 'law-breaking' journalism

It was reported in the Sunday Times on the weekend - and in the Sun this morning, but nowhere else - that the BBC Panorama team may be facing a defamation action at the hands of the fertility doctor whose questionable practices they sought to expose in an edition aired in January. I've noted previously that there is also a possibility that criminal prosecutions may be brought.

The allegation seems to be that the BBC was unbalanced in its reporting, in that it focused on the experiences only of undercover reporters who arguably did not receive the most appropriate treatments and didn't present the wider, less prejudicial findings of its investigation. Lord Winston, who appeared on the programme, has expressed his concern that the focus of programme was on the purportedly errant behaviour at the individual clinic rather than on the laxity of the regulatory regime.

Without having seen either the programme or the details of the legal complaint it is difficult to comment cogently, but it seems clear that the doctor's solicitors hope to preempt the use of the Reynolds qualified privilege defence to defamation (that allows media organisations to avoid liability even if they are later proven to be wrong and to have caused damage to reputation so long as the story was in the public interest and was the product of responsible journalism).

It would seem to me that the subject matter of the report was clearly a matter of public concern, and so the focus will be on the satisfaction or otherwise of the responsible journalism test. The court will allow a significant degree of leeway for editorial judgment, and so the mere fact that Panorama adopted the slant it did is unlikely in itself to preclude use of the defence.

On this the BBC might draw succour from the recent House of Lords decision in Jameel v Wall Street Journal Europe [2006] UKHL 44 (if I can be allowed a second self-serving reference for the day, I have a short paper coming out on this topic this month: (2007) Communications Law, 12(2), 52-59). That said, if it can be shown that the programme makers were not even-handed in terms of allowing the doctor to answer the case presented they may be at risk. Its worth noting that the BBC's lawyers seemed content with the programme content.

'This is England' film classification overturned by council

There was an interesting discussion on You and Yours on the radio last week, which was followed up in the Guardian over the weekend. It concerned the overturning by a local council of a classification given by the British Board of Film Classification to the new Shane Meadows movie, This is England. The film is geared in part towards confronting teenagers with the stupidity of racism, and so the award of an 18 certificate rather defeated the object.

BBC wins High Court FoI case on Balen Report

On Friday, the BBC learned that it has been successful - at least for the meantime - in its attempt to refuse publication of an internal report into its coverage of the Middle East (1,2). Quite apart from the specific issues under examination, the case was a milestone as it was the first time that the provisions of the Freedom of Information Act have been considered under appeal to the High Court.

Before Easter, Mr Justice Davis had indicated (without at that point publishing reasons) that the BBC would be successful on the first of two issues in the case (on this, and the general background, see earlier post). This was the question as to whether the Information Tribunal has competence to reassess the view of the Information Commissioner on whether information held by public service broadcasters was retained for the purposes of 'journalism, art or literature'. Where information is so held it is not subject to disclosure under the FoIAct, as the PSB would not be considered to be a public authority in that context. The judge's ruling results in the curious position that the BBC could appeal a finding by the information Commissioner that material was not held for journalistic purposes, but that others cannot appeal the contrary finding. While an application for judicial review of the Commissioner's decision could still be made, this is inevitably a more costly and burdensome route.

The second issue before the judge comprised an application for judicial review. Mr Justice Davis granted permission for review, but then proceeded to find against Steven Sugar - the solicitor who has brought the case for disclosure (see paras 48 et seq).

While he has been refused leave to appeal the matter further, Mr Sugar has written to Sir Michael Lyons of the BBC Trust to encourage publication notwithstanding the court ruling. He is also hopeful that either the Information Commissioner or the Department for Constitutional Affairs will bring the case to the Court of Appeal on behalf of the public interest.

The transcript of the judgment is available on Casetrack and BAILII: British Broadcasting Corporation (R on the application of) v The Information Tribunal [2007] EWHC 905 (Admin)