“(1) For the purposes of this Part, a relevant merger situation has been created if— (a) two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within section 24; and (b) the value of the turnover in the United Kingdom of the enterprise being taken over exceeds£70 million .” (a) two or more enterprises have ceased to be distinct enterprises at a time or in circumstances falling within section 24; and (b) the value of the turnover in the United Kingdom of the enterprise being taken over exceeds£70 million .”
“(2) The Secretary of State may make a reference to the Commission if he believes that it is or may be the case that— (a) a relevant merger situation has been created; (b) the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services; (c) one or more than one public interest consideration mentioned in the intervention notice is relevant to a consideration of the relevant merger situation concerned; and (d) taking account only of the substantial lessening of competition and the relevant public interest consideration or considerations concerned, the creation of that situation operates or may be expected to operate against the public interest.” (a) a relevant merger situation has been created; (b) the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services; (c) one or more than one public interest consideration mentioned in the intervention notice is relevant to a consideration of the relevant merger situation concerned; and (d) taking account only of the substantial lessening of competition and the relevant public interest consideration or considerations concerned, the creation of that situation operates or may be expected to operate against the public interest.”
“(2) If the Commission decides that such a situation has been created, it shall, on a reference under section 45(2), decide the following additional questions— (a) whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services; and (b) whether, taking account only of any substantial lessening of competition and the admissible public interest consideration or considerations concerned, the creation of that situation operates or may be expected to operate against the public interest.” (a) whether the creation of that situation has resulted, or may be expected to result, in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services; and (b) whether, taking account only of any substantial lessening of competition and the admissible public interest consideration or considerations concerned, the creation of that situation operates or may be expected to operate against the public interest.”
“(a) whether action should be taken by the Secretary of State under section 55 for the purpose of remedying, mitigating or preventing any of the effects adverse to the public interest which have resulted from, or may be expected to result from, the creation of the relevant merger situation; (b) whether the Commission should recommend the taking of other action by the Secretary of State or action by persons other than itself and the Secretary of State for the purpose of remedying, mitigating or preventing any of the effects adverse to the public interest which have resulted from, or may be expected to result from, the creation of the relevant merger situation; and (c) in either case, if action should be taken, what action should be taken and what is to be remedied, mitigated or prevented.”
“(9) In deciding the questions mentioned in subsections (7) and (8) the Commission shall, in particular, have regard to the need to achieve as comprehensive a solution as is reasonable and practicable to— (a) the adverse effects to the public interest; or (b) (as the case may be) the substantial lessening of competition and any adverse effects resulting from it.” (a) the adverse effects to the public interest; or (b) (as the case may be) the substantial lessening of competition and any adverse effects resulting from it.”
“(7) In deciding whether to make an adverse public interest finding under subsection (2), the Secretary of State shall accept— (a) in connection with a reference to the Commission under section 45(2) or (4), the decision of the report of the Commission under section 50 as to whether there is an anti-competitive outcome; and (b) in connection with a reference to the Commission under section 45(3) or (5)— (i) the decision of the report of the Commission under section 50 as to whether a relevant merger situation has been created or (as the case may be) arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and (ii) the decision of the report of the OFT under section 44 as to the absence of a substantial lessening of competition.” (a) in connection with a reference to the Commission under section 45(2) or (4), the decision of the report of the Commission under section 50 as to whether there is an anti-competitive outcome; and (b) in connection with a reference to the Commission under section 45(3) or (5)— (i) the decision of the report of the Commission under section 50 as to whether a relevant merger situation has been created or (as the case may be) arrangements are in progress or in contemplation which, if carried into effect, will result in the creation of a relevant merger situation; and (ii) the decision of the report of the OFT under section 44 as to the absence of a substantial lessening of competition.”
“If Mr Beloff’s submission amounts to no more than that the Tribunal should use its specialist expertise wherever possible when assessing the validity of findings and the lawfulness of decisions in the context of section 120 reviews, then such submission can hardly be disputed. However this would not in our view be applying the principles of judicial review in a different way from the Administrative Court. If his submission amounts to more than this then it seems to us that it is not supported by the authorities to which he has drawn our attention, and is inconsistent with IBA and with subsection 120(4) itself. We consider that the principles we should apply in this application are those which are helpfully set out and discussed in, in particular, Tameside and IBA, and which were applied in the Tribunal decisions cited to us. As the Commission and the Secretary of State submit, the Tribunal must avoid blurring the distinction which Parliament clearly drew between a section 120 review and an appeal on the merits. We shall need to bear this distinction in mind when we come to deal with the specific points raised by Sky in relation to the factual basis upon which the Commission reached the challenged findings. It is one thing to allege irrationality or perversity; it is another to seek to persuade the Tribunal to reassess the weight of the evidence and, in effect, to substitute its views for those of the Commission. The latter is not permissible in a review under Section 120.”
“A further factor relevant to the intensity of review is whether the issue before the Tribunal is one properly within the province of the court. As has often been said, judges are not “equipped by training or experience or furnished with the requisite knowledge or advice” to decide issues depending on administrative or political judgment (see Brind [1991] 1 AC at 767, per Lord Lowry). On the other hand where the question is the fairness of a procedure adopted by a decision-maker, the court has been more willing to intervene.”
“100. I have referred to these cases in some detail, because they show that the Tribunal did not need to rely on some special dispensation from the ordinary principles of judicial review. Those principles, whether applied by a court or a specialised tribunal, are flexible enough to be adapted to the particular statutory context. No doubt the existence of such a special jurisdiction will help to ensure consistency from case to case; and the expertise of the Tribunal will better fit it to deal with such cases expeditiously and with a full understanding of the technical background. However, the essential question was no different from that which would have faced a court dealing with the same subject-matter. That question was whether the material relied on by the OFT could reasonably be regarded as dispelling the uncertainties highlighted by the issues letter. That question was wholly suitable for evaluation by a court. It involved no policy or political judgment, such as would be regarded as inappropriate for review by the Administrative Court.”
“3.46 … Further we thought that ITV’s appetite for pursuing certain strategies at all would be reduced if it was aware that these strategies were likely to cause conflict with BSkyB. 3.47 If ITV perceived BSkyB to be likely to have 25 per cent of the vote, we would expect ITV to take into account any expected opposition from BSkyB in formulating its policy and in deciding whether to bring it forward. In these circumstances, BSkyB’s ability to influence policy might not turn on the precise percentage of the vote held.”
“3.56 We also considered whether BSkyB’s ability to block a contested or ‘hostile’ takeover of ITV would give it the ability to affect ITV’s strategy. We did not think that this would be the case, since such a takeover would not form part of ITV’s strategy. However, we thought that the ability to block a takeover (whether hostile or friendly) could increase BSkyB’s ability to influence other shareholders (see paragraphs 3.58 to 3.62). 3.57 We noted that BSkyB would also have the ability to block a merger recommended by the ITV Board as part of its strategy for the business, for example through blocking a squeeze out (see paragraph 3.53) or a scheme of arrangement (see paragraph 3.42).”
“75. We do not consider that Sky’s approach to the statutory tests is correct. As far as SLC is concerned (and similar reasoning applies to the RMS issue) we agree with the Commission that the appropriate question for the Commission to ask itself is whether Sky may be expected (i.e. on the balance of probabilities) to have the opportunity to exercise its material influence so as to give rise to an SLC in a relevant market. This is not the same as asking whether it is more likely than not that a specific investment opportunity will materialise. We agree with the Commission that where there is a range of ways in which competition in a market might be lessened substantially, the Commission is not required in respect of each potential transaction identified by the Commission to establish that it is more likely than not to occur. In our view Sky’s suggested approach … would not only be more than is required in law, but it would also be wholly unrealistic, and would probably emasculate the merger regime.” “80. So, in the context of an assessment as to whether there is likely to be an SLC in the future, the Commission must give full and proper consideration to the evidence which it has gathered, and apply the “probabilistic test” at the end-point. In other words it must ultimately ask itself whether it is satisfied on the balance of probabilities that there will be an SLC caused by the RMS, but the Commission is not under an obligation to make findings of fact (whether on a balance of probabilities or otherwise) in respect of each item of evidence. Nor is it obliged to find that any particular potential investment is more likely than not to occur before it can take it into account in its overall assessment of the probability of SLC.” “82. The Commission found that Sky had the combination of ability, incentive and opportunity substantially to reduce the competitive constraint imposed on it by ITV, one of Sky’s main competitors in the all-TV market. In its approach to this issue it did not in our view circumvent the standard of proof. The finding reflected inferences which the Commission considered should be drawn from the available evidence: the Commission did not reverse the burden of proof or presume competitive effects in the absence of compelling evidence from Sky, as suggested. Of course, whether the Commission’s findings in the present case are adequately supported by the evidence is a separate matter and will be considered later in this judgment.”
“There are other areas which may not require significant investment but which BSkyB may, nevertheless, be in a position to influence through its 17.9 per cent shareholding in ITV. For example, BSkyB could attempt to influence the course of any future transactions involving ITV to weaken the constraint that FTA services would otherwise provide, for example by disrupting an acquisition of ITV that might otherwise strengthen ITV’s competitive position, or by attempting to encourage the acquisition of ITV by another buyer who might act in BSkyB’s interests, for example by [X]. With regard to the first of these examples, [X] certain acquisitions would create a stronger threat from ITV: [X]. The second scenario would cause substantial disruption to ITV’s current business model, and would be likely to weaken its contribution to the appeal of FTA services. [X]”
“91. We do not agree with Sky’s arguments. The identification of a counterfactual does not mean that possible changes in the market cannot be considered in the assessment of SLC. The identification of the counterfactual does not ossify the SLC analysis. Indeed, Mr Flynn QC who also appeared for Sky rightly accepted that the counterfactual could not be “pinned to a board like a butterfly at an early part of the Commission’s assessment, it actually remains alive, vibrant and important throughout” the substantive analysis. As already noted, the purpose of the counterfactual is to assist in assessing the effects of the merger. However, it must be kept in mind that the counterfactual is not a statutory test: it is an analytical tool used to assist in answering the question posed by section 47 of the Act, namely whether the creation of an RMS may be expected to result in an SLC within any market or markets in the United Kingdom for goods or services. Competitive conditions can and do change over time, and it is important to take into account the potential for change in the market in order to consider as fully as possible the level and intensity of the competition without the merger. 92. In our view the Commission was entitled to compare the competitive effects of the Acquisition with those of what it regarded as the most likely counterfactual of an independent ITV, but at the same time to take into account in its assessment of SLC plausible situations or strategies which might result in the postulated independent ITV ceasing to be so. Similarly, in considering the ways in which Sky’s ability materially to influence ITV’s policy may be expected to give rise to an SLC, the Commission was correct to consider the effect such influence could have on potential ITV acquisitions or on ITV being acquired. We consider that the Commission would have been vulnerable to criticism had the possible occurrence of these situations or transactions been left out of account.”
“a prediction of events which are more or less likely to occur in future if a decision prohibiting the planned concentration or laying down the conditions for it is not adopted”
“6.49 Secondly, we note that a partial divestiture would result in BSkyB relinquishing both its economic interest in, and its voting control over, the shares divested. The voting trust mechanism proposed by BSkyB, on the other hand, whilst taking some or all of ITV shares out of BSkyB’s voting control, would leave the economic interest of the whole of its 17.9 per cent stake in ITV with BSkyB. 6.50 BSkyB would therefore remain much the largest owner of shares in ITV. Even if BSkyB did not retain any voting rights, other shareholders could still attach additional weight to BSkyB’s views on ITV’s strategy, as a result of its substantial economic interest in ITV. Further, as set out in paragraph 4.117, by retaining its economic rights relating to a 17.9 per cent shareholding, BSkyB could have the opportunity to influence the course of any future transaction involving ITV, since it would, for example, still be able to choose whether to sell its shares to a third party.”
“Moreover, as set out in paragraph 6.50, BSkyB could also have the opportunity to influence the course of any future transactions involving ITV as a result of retaining its economic interest and hence remaining much the largest owner of shares in ITV.”
“We took the concept of plurality of persons with control of media enterprises to refer both to the range and the number of persons with control of media enterprises.”
“It seems to us that if it had been intended to draw such an important distinction between the merging parties and other enterprises falling within the plurality assessment then nothing would have been easier for the draftsman to do in plain words. We find it inconceivable that the distinction would have been drawn instead by a virtually coded use of the word “would”.”
“We concluded that a plurality of control within the media is a matter of public interest because it may affect the range of information and views provided to different audiences. In our provisional findings, we defined plurality in these terms. In response to comments on our provisional findings, we thought it important to draw a distinction between the plurality of persons with control of media enterprises and the implications of that plurality for the range of information and views made available to audiences.”
“This is basically a two-stage process. First the Commission must identify, in an initial “headcount”, the number of controllers (of relevant media enterprises) remaining after the merger. In doing so the Commission must apply the statutory provisions, and in particular section 58A(5). This stage is the logical prelude to the second stage of the exercise, which asks whether there is a sufficient plurality of owners controlling media enterprises in a given case (a sufficiency assessment). We have considered whether the effect of section 58A(5) might be limited to the initial “headcount”, leaving it open to the Commission to take account of degrees of control when they come to assess sufficiency of plurality. However we can see no justification for restricting the effect of the provision in this way. There is no support for such a distinction in the provision itself, and it would still render the subsection otiose.”
“Nor do we accept the argument that the view of the legislation which we have reached reduces the Commission’s exercise to a mere “headcount” and removes its ability to carry out a detailed inquiry into the issues and to explore the true effect of the merger on the sufficiency of plurality of persons in control of media enterprises. A qualitative assessment of the sufficiency of the plurality of persons in control of media enterprises is still required but it must be carried out within a framework which treats the merged companies (and any other media enterprises to which subsection 58A(5) applies) as subject to a single controller. Although that framework does in our view preclude account being taken of ‘internal plurality’, it still leaves room for a detailed and wide-ranging qualitative assessment on the basis of which the Commission will judge whether the ‘external plurality’ of the remaining controllers is “sufficient”.”