10 Jul 2011
Analysis of BSkyB takeover
Rosemary Choueka, partner, head of EU, competition and regulation:
Following Culture Secretary Jeremy Hunt's letter to the Office of Fair Trading (OFT) and Ofcom, Lawrence Graham's head of EU, Competition and Regulation, Rosemary Choueka, commented:
"Jeremy Hunt's letter to the OFT and Ofcom is unlikely to persuade them to reconsider the News Corp acquisition of BSkyB. The Government has little hope of success legally, but it is clear that it wanted to be seen to do something in light of the phone hacking scandal.
"The first question raised in Mr Hunt's letter is whether the closure of the News of the World impacts the competitive landscape in a way that requires the re-examination of the acquisition. This is nonsense. The News of the World was not an independent voice representing a different political viewpoint. It was part of a stable of publications. So the disappearance of the paper does not mean that there is one less view out there and does not change the competitive dynamic.
"The second question is the much debated issue of whether the directors of News Corp are "fit and proper" people to hold a broadcast licence. There is no legal definition of who is "fit and proper". Morality aside, Ofcom would have its work cut out to refuse a licence to the directors when none of them have been directly implicated in the phone hacking saga or indeed implicated in any criminal activity.
"The last issue is whether News Corp can be relied on to comply with the undertakings given to spin Sky News off into a separate company once the acquisition has completed. It has been alleged that Mr Murdoch has ignored such promises before. But prior to the latest revelations the OFT and Ofcom were persuaded (and have made the undertakings as legally watertight as possible) that this would be carried out and on that basis approved the deal. It is hard to see why recent developments should change this assessment. Mr Murdoch is no more likely (or perhaps just as likely) not to observe the undertakings now as before the News of the World closed down. So again, Mr Hunt is unlikely to succeed with this argument."