Department for Culture, Media and Sport
How is the proposed remedy consistent with the OFT’s gu
idance that itis rare to accept even interim purchase/supply arrangements betweenmerging partners and the divestment business given the requirementsfor a clear cut remedy in lieu of a Competition Commission reference?
The OFT's guidance relates to different issues from those I have to deal with.The OFT remedies are designed to solve competition concerns and theguidance is tailored to those sorts of issues. Where merging parties and adivested business are direct competitors, I can understand that it may be rarefor purchase/supply arrangements to be accepted. Here, however, I amdealing with a plurality issues in circumstances where all of the competitionissues have been dealt with by the EU Commission, so the guidance is notquite on point. In addition, it is worth noting that whereas with the OFT, if itrefers a competition case to the CC, that is the end of its involvement, withplurality matters, the structure always leaves the final decision to me, even ifthe CC were to be involved. In any event, I have taken into account theadvice of both the OFT and Ofcom in this process.In the end, under the statutory scheme, I have to consider whether theproposed remedy prevents, mitigates or remedies concerns about plurality.The remedy in this case is designed purely to address the plurality issue. Tothat extent I am conscious of ensuring the Newco is a viable provider of news.Ofcom provided its report identifying its concerns regarding plurality which Itook seriously. Whilst there were issues in that Ofcom analysis about whichquestions might have arisen, in reaching the view that I should consult on theproposed remedy, I sought to ensure that the remedy dealt with the concernsidentified by Ofcom. I will, of course, consider carefully the issues raised inthe course of the consultation and will then reach my view whether theproposed remedy will fulfil the relevant statutory test..6.
Company Directors have a duty to act in the interests of their companyand shareholders. Therefore is it not the case that as Newscorp are themain customer and distributor for Sky News the Directors of Newco willhave a duty to respond positively to the interests of Newscorp?
The directors of Newco have a duty to act in the interests of Newco. This willclearly involve consideration of Newco's relationship with Newscorp as SkyNews' main customer, but decisions in each instance will depend onindividual circumstances. There could equally be circumstances in whichindependent directors advise the board to pursue a strategy that makesNewco less dependent on Newscorp. It is worth noting also that, as with anyother company, the directors of Newco will act in accordance with the Articlesof Association, which will have the provisions relating to independenceenshrined in them.