Government refers News Corp's BSkyB takeover bid to Competition Commission

Under provisions within the Enterprise Act the Culture Secretary can refer proposed mergers and takeovers to the Competition Commission.

The Competition Commission is an independent public body that is tasked with considering whether a prospective takeover would leave competition in the UK in a healthy state and whether it would benefit the affected organisations, customers and the economy.

Jeremy Hunt said that he had referred the proposed takeover to the Commission after News Corporation withdrew its offer to spin off Sky News.

"I understand that ... News Corporation has withdrawn its undertakings in lieu," Hunt said in an address to MPs in the House of Commons on Monday.

"As a result of News Corporation’s announcement ... I am now going to refer this to the Competition Commission with immediate effect," Hunt said.

The Government recently announced it had drawn up conditions under which News Corporation's planned takeover could proceed without needing the Competition Commission's approval.

The undertakings detailed that News Corporation would separate Sky News from BSkyB in order to complete a takeover.

The undertakings also included plans for an independent director to be present at Sky News board meetings when editorial decisions were being taken. Sky News would also have to be promoted across other Sky channels, the undertakings had said.

In a statement News Corporation said it was confident the Competition Commission would approve its takeover of BSkyB.

"News Corporation ... is withdrawing its proposed undertakings in lieu of reference to the Competition Commission with respect to its proposed acquisition of BSkyB," the News Corporation statement said.

"Should the Secretary of State for Culture, Olympics, Media and Sport decide on this basis to refer the proposed transaction to the Competition Commission for a detailed review, News Corporation is ready to engage with the Competition Commission on substance," the statement said.

"News Corporation continues to believe that, taking into account the only relevant legal test, its proposed acquisition will not lead to there being insufficient plurality in news provision in the UK," the statement said.

The Enterprise Act states that the Competition Commission must decide on whether to allow a takeover to proceed within 24 weeks. It can request up to a further eight weeks to consider the proposals in extenuating circumstances, the Act provides.

News Corporation already owns 39.1% of the shares in BSkyB. It first announced its plans to buy the remaining shares in the company last year.