Tuesday, 12 July 2011

What a difference a day makes !! BSkyB merger referred to the Competition Commission

Dinah Washington
Update 17th July:  Sir Paul Stephenson resigned as Commissioner of the Metropolitan Police and Rebekah Brooks arrested.

Update 15th July:  Rebekah Brooks resigned as Chief Executive of News International.   There are calls for the resignation of the Metropolitan Police Commissioner Sir Paul Stephenson who hired a former News of the World executive.

Updates 13th and 14th July:  Prime Minister has announced that there is to be one inquiry but in two parts.  It will be chaired by Lord Justice Leveson.   The inquiry is to operate under the terms of the Inquiries Act 2005.  See No.10 - Prime Minister's announcement.

The draft Terms of Reference for the Inquiry have been published.

In advance of a debate in Parliament, News Corporation announced the withdrawal of their bid to have 100% control of BSkyB - Guardian and Independent.

As the late Dinah Washington (1924-1963) put it - "What a difference a day makes!" The focus in the BSkyB affair has now, so it seems, shifted from Ofcom and the "fit and proper person" test, to the Competition Commission and the "media plurality" test.  The News Corporation/BSkyB merger proposal has been referred to the Competition Commission by the Secretary of State for Culture, Media and Sport - Mr Jeremy Hunt    The two tests lie at the heart of the law relating to media ownership / control and both tests lack clarity as to their scope.

The Commission's investigation is likely to take a considerable time.  Also, the No. 10 website states that there will be two inquiries- "a “full, public and independent” inquiry headed by a judge to investigate why the first police investigation failed, what exactly was going on at the News of the World; and what was going on at other newspapers?  There will also be a second inquiry to learn the wider lessons for the future of the press. It will look at the culture, the practices and the ethics of the British press."  Again, these will take some considerable time.

The reason for the referral of the bid to the Competition Commission is that, on Monday 11th July, an undertaking which had been offered was withdrawn.  The undertaking related to "spinning off" Sky News if the merger had been allowed to proceed.  This, it is reported, forced the hand of the Culture Secretary to refer the bid to the Commission.  Some commentators now argue that this gives the bid a better chance of being eventually successful since public anger will - (so some hope) - have died down by the time the Commission reports.  There seems little doubt that the vaguely defined "fit and proper person" test will have worried News Corporation.  The Competition Commission will look just at media plurality.

In very simple terms, media plurality relates to
the desirability of diversity of control / ownership of media outlets rather than a concentration of media power in the hands of a few.  Why does it matter?  This is looked at by EPolitix here.   The London School of Economics Media Policy Project is also of interest.  See the LSE's "Media Plurality dossier: The case of NewsCorp's Bid for BSkyB" and

See the Department for Culture, Media and Sport announcement of 11th July.

What is the Competition Commission

In law, it owes its existence to the Competition Act 1998 s.45.  The Commission came into being in 1999 and replaced the former Monopolies and Mergers Commission.  The Enterprise Act 2002 introduced a new regime for assessing mergers and markets in the UK.   Further amendments to the law came with the Communications Act 2003 Part 5 Chapter 2 "Media Mergers."  A useful explanatory document is "UK Merger Control under the Enterprise Act 2002" - Slaughter and May, November 2009.

The scenario is widening:  Media reports on the morning of 12th July show that the scope of alleged "iniquity" may be extremely wide. Gordon Brown entered the fray with "My son's medical records were hacked, says Brown."  This takes attention toward what is referred to as "blagging" which is essentially obtaining information by deception.  Another angle of considerable interest is the report that a lawsuit is being filed in the USA against News Corporation - Telegraph 12th July.

Media reporting:  Needless to say, these events have attracted massive media coverage.  In the House of Commons on the afternoon of 11th July, David Cameron was nowhere to be seen.  Matters were left to the Culture Secretary - The Guardian "Jeremy Hunt braves hoots, squeaks and cynical cheers alone."    Of course, there is no doubt that links between various Ministers and persons connected with Murdoch have been quite close in recent times.  Other links are:

Brown condemns "disgusting work" of News International Journalists - The Guardian 12th July
Brown accuses Sunday Times of criminal links - The Independent 12th July
Hackers spied on the Queen and PM - Daily Express 12th July
Police Chiefs to be quizzed over hacking - The Independent 12th July
Phone hacking: the US reaction - New Statesman 12th July

Press Regulation:  The press currently regulate themselves through the Press Complaints Commission (PCC).  From time to time, there have been hints that tighter regulation may be needed.  Herein lies the great danger of the present hacking scandal.  Eventually, it might lead to much tighter control over the media with fears that the State (i.e. Ministers) will interfere in what might be published.  See, for example, Telegraph - "Phone hacking: David Cameron says press regulation has failed ..."

The Calcutt Report back in the early 1990s suggested that a tribunal be set up with powers to curb the Press - Independent 15th January 1993.  At the time, the Law Society Gazette published "Media lawyers mostly cool on Calcutt Report" - LS Gazette 13th January 1993. 

Addendum 12th July: 

Rupert Murdoch 'invited' to appear before MPs - The Guardian - see also Parliament
Government backs Labour call for Murdoch to ditch BSkyB bid - The Guardian - this is an exceptionally rare political move but, in so voting, Parliament would surely speak on behalf of the majority of the British people.  Such a vote would place Murdoch under some political pressure but it would not be legally binding.  In fact, there could be legal difficulties if certain Ministers were to support such a motion.
Video of House of Commons Home Affairs Committee on 12th July - Phone hacking inquiry

Addendum 13th July:

The Sun newspaper denied accessing the medical records of Gordon Brown's son.  They nevertheless published the information.   Evidence given by Assistant Commissioner John Yates to the House of Commons Home Affairs Committee was said to be "unconvincing" by the Committee's chairman.   It was also reported that Murdoch is spending up to £4bn to buy shares in News Corp in order to boost its share price.

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