Legal Research

Court?s decison in BskyB ITV shareholding case interesting for media plurality interpretation

By scott

The High Court has dismissed BSkyB’s appeal against rulings by the Competition Commission (CC) and the Secretary of State, as upheld by the Competition Appeal Tribunal (CAT), that directed BskyB to decrease its 17.9% shareholding in ITV to below 7.5%. The court did disagree with the CAT’s conclusion as to media plurality, reinstates the CC conclusion on that point, and suggests now that possible difficulties in applying section 58(2C) and section 58A(5) of the Enterprise Act 2002 have been identified, that the government should look to amend the legislation accordingly.

The Court identified that the key issue on media plurality turns on the correct view of the interaction between section 58(2C) and section 58A(5) of the Enterprise Act 2002 , and in particular on the meaning of the phrase, not defined in the Act, “sufficient plurality of persons with control of ? media enterprises” in section 58(2C)(a).

58A(5)
(5) For the purposes of section 58, where two or more media enterprises?
(a) would fall to be treated as under common ownership or common control for the purposes of section 26, or
(b) are otherwise in the same ownership or under the same control,
they shall be treated (subject to subsection (4)) as all under the control of only one person.
58(2C)

(2C) The following are specified in this section?
(a) the need, in relation to every different audience in the United Kingdom or in a particular area or locality of the United Kingdom, for there to be a sufficient plurality of persons with control of the media enterprises serving that audience;
(b) the need for the availability throughout the United Kingdom of a wide range of broadcasting which (taken as a whole) is both of high quality and calculated to appeal to a wide variety of tastes and interests; and
(c) the need for persons carrying on media enterprises, and for those with control of such enterprises, to have a genuine commitment to the attainment in relation to broadcasting of the standards objectives set out in section 319 of the Communications Act 2003.

It concluded:

“[I]t seems to us that the Commission was correct to hold that, whereas in reckoning the number of controllers of media enterprises for the purposes of section 58(2C)(a) only one controller is to be counted in respect of both or all of the relevant enterprises (here Sky and ITV), nevertheless, when it comes to assessing the plurality of the aggregate number of relevant controllers and to considering the sufficiency of that plurality, the Commission may, and should, take into account the actual extent of the control exercised and exercisable over a relevant enterprise by another, whether it is a case of deemed control resulting from material influence under section 26 or rather one of actual common ownership or control. It does not seem right to us to read the artificial effect of section 58A(5), in a case within paragraph (a), as extending farther than is necessary and clearly required by that provision. This reading of the subsection puts it in the same category as section 58A(4), being ancillary to the provisions of section 58. It applies to the calculation of the number of controllers, both as regards the merged or merging enterprises and as regards any others serving the relevant audience. On the other hand, it does not allow the provision to have an overriding effect, excluding a consideration of the limited extent (if it be the case) of any control actually exercised or exercisable by a controlling enterprise over another enterprise, in the course of the qualitative assessment which is required on an investigation by the Commission in relation to the particular public interest consideration identified in section 58(2C)(a).
In relation to the concern expressed by the Tribunal about the possibility of an increase in the level of control or influence without a new RMS arising, so that the merger control provisions would not apply (referred to at paragraph [103] above), on the one hand that possibility does not appear to exist in the present case because of the application to Sky of the 20/20 rule (see paragraph [44] above) and on the other hand, in a case in which that possibility does or might exist, the Commission would be entitled to take it into account when considering the sufficiency of the plurality of the controllers as matters stand following the RMS.
It seems to us unsatisfactory that the terms of the Act should have been open to the conflicting interpretations placed on it by the Commission and the Tribunal. If it were thought that to limit the deeming effect to one of number alone does not allow for sufficient protection of the sensitive interest of media plurality, it should not be difficult to amend the legislation accordingly, now that possible difficulties in applying the current legislation have been identified. ”

The court notes that whilst this does not affect the outcome of the present case, it may be of relevance in future. The Court refused BskyB permission to appeal to the Supreme Court on one point as regards the rejection of a possible alternative remedy, but noted that ity remains open to BskyB to apply to the Supreme Court itself for such permission to appeal.

Full post as published by Information Overload on January 21, 2010 (boomark / email).