Competition Commission details Sky probe

[BGonaSTICK]

The Competition Commission has published an issues statement detailing areas it will probe as part of its investigation into BSkyB's purchase last November of a 17.9% stake in ITV. The investigation - which is looking at both the competition and public interest issues arising from the stake - was ordered in May by the then trade secretary Alistair Darling and followed earlier recommendations from the Office of Fair Trading and Ofcom. Sky's ITV stake purchase scuppered Virgin Media's hopes of merging with the broadcaster.

The Competition Commission said it had to decide whether a relevant merger situation had been created, and whether that situation might result in a substantial lessening of competition. The inquiry group had identified six possible ways in which the acquisition might result in a substantial lessening of competition:

Loss of current and potential competition within the TV market, which, for example, might affect "ITV's strategic decisions concerning the future development of the DTT platform (including the allocation of multiplex capacity), the future development of Freesat, or the future of content production and commissioning"

Loss of potential competition in pay-TV

Loss of potential competition in content production

Loss of competition in bidding for sports rights and other premium rights

Coordinated effects in television advertising

Loss of competition in the provision of television news, since the acquisition creates an ownership link between ITV and Sky News which could reduce competition to supply news to third parties such as Channel 4 and Five, and "lead to lower quality of news for viewers".

"If the inquiry group considers that the merger may be expected to result in a substantial lessening of competition, it will consider whether and, if so, what remedies might be appropriate, taking into account any customer benefits that might arise from the acquisition," said the Competition Commission. "If it decides that the merger acts against the public interest, it must also decide what remedial action should be taken by the Secretary of State or others."

The final report is due to be completed by November 7, although provisional findings will be published in mid-September.

[Yorks]

I'm sure that 'the merger may be expected to result in a substantial lessening of competition', but whether the Competition Commission have the bottle to do anything about it, remains to be seen.