Vivendi/BSkyB transaction: CC sends issues letter

United Kingdom

The Competition Commission (CC) sent an issues letter on 7th January 2000 to the main parties in its inquiry into the acquisition by Vivendi of a material interest in BSkyB (BSB) and it was made public the following week to allow further points to be raised by interested parties. The CC is expected to submit its report to Stephen Byers, Secretary for Trade and Industry secretary, on 25th February 2000.

The CC is considering several issues in relation to whether any matters operate or may be expected to operate against the public interest, including:

(a) whether, as a result of the acquisition, Vivendi is able to control or materially influence BSB, and, if so, what are the appropriate definitions of the markets affected by the merger (e.g. is pay-TV in the UK a relevant market ?),

(b) as Vivendi has an interest in Canal Plus, whether the merger could affect competition for the acquisition of sport and film rights for use in the UK,

(c) whether, through Vivendi’s interests in Canal Plus and SECA, the merger could adversely affect the ability of pay-TV platforms to compete with BSB, because it could affect the supply of conditional access and access control technology to these pay-TV platforms, cause information about them to reach BSB and be used to their disadvantage,

(d) the reduction in potential competition in pay-TV in the UK from Vivendi/ Canal Plus given their programming and other interests,

(e) the adverse effects on UK sports clubs given BSB and Vivendi’s interests in certain sports clubs, and

(f) possible remedies for any adverse effects that may result from the merger.

Comment: this announcement came not long before press reports emerged that the OFT is examining whether BSB is trying to “buy” influence in the Premier League in advance of negotiating crucial television rights, and whether a formal inquiry should be launched into BSB’s investments.

The company currently owns a 10% shareholding in three Premiership clubs; Manchester United, Leeds United, and Sunderland (the maximum permitted by the football authorities) and has employed an exclusive media adviser for each club. Ministers fear this will mean BSB is effectively “sitting on both sides of the table” at the negotiations and may try to block any attempt by the company to invest in more clubs and thereby veto any deal.

(Competition Commission Press Release 07/01/2000)