Murdoch's takeover bid for BSkyB is referred to Competition Commission as hacking controversy heats up

Legal wrangling over News Corporation's controversial bid to take over BSkyB stepped up a gear this week as the proposed deal was referred to the Competition Commission.

The referral by culture secretary Jeremy Hunt on Monday afternoon (11 July) was made in response to News Corp withdrawing from a proposed undertaking to spin off Sky News and came amid mounting public pressure for the tie-up to be halted as allegations continued to emerge in the ongoing phone-hacking scandal.

As the raft of law firms either winning roles or being publicly named in relation to the matter increases almost daily (see details below), competition partners have warned that, despite public outcry, the Competition Commission's review must focus only on the legal test of media plurality.

LG head of EU, competition and regulation Rosemary Choueka said: "The Competition Commission shouldn't be influenced by the media circus around the phone-hacking saga or by public outcry. The Commission is effectively looking at the deal with a blank sheet now."

The phone-hacking scandal surrounding News International has also given rise to speculation over whether its parent company News Corp will pass the test of being a 'fit and proper' owner for BSkyB, as required by UK media regulator Ofcom. However, this will not be considered as part of the Competition Commission review, which is expected to last between six and nine months.

Cadwalader Wickersham & Taft Brussels managing partner Alec Burnside said: "Media mergers always have to face a bit of an obstacle course, but this one just got a whole lot more complicated. The European Commission already gave its green light to the deal so far as concerns competition, but the UK invoked its right to protect media plurality in the UK. [In addition to the competition review], Ofcom has explicitly flagged its power to ensure that anyone holding a broadcasting license is 'fit and proper'. The two are separate in principle, but in practice there is already pressure building around this issue."

News Corp's bid also faces major political hurdles. As Legal Week went to press, Parliament looked set to vote for the deal to be delayed.

Details of the phone-hacking scandal at News International have been emerging daily in recent weeks, with the publisher closing down the News of the World (NoW) last week (10 July) after allegations emerged that the phones of murdered schoolgirl Milly Dowler, relatives of the 7/7 London bombings and the families of dead soldiers were among those to 
have been accessed.

Law firms have also been embroiled in the saga. Notably, Harbottle & Lewis' role in the matter was highlighted this week after disclosures by the BBC regarding the content of a cache of emails from NoW staff, some of which had been reviewed by the law firm for News International in relation to an internal inquiry. Separately, The Guardian on Monday alleged that Allen & Overy had been tricked into giving out the value of a flat acquired by former prime minister Gordon Brown.

———————————————————————————————————————————————–

Legal roll call

Advisers on the News Corp-BSkyB bid

Allen & Overy, Hogan Lovells and Skadden Arps Slate Meagher & Flom – advising News Corporation on corporate and competition matters relating to the bid for BSkyB.

Herbert Smith – advising BSkyB on the bid by News Corp.

Slaughter and May – advising a coalition of media organisations opposed to the bid.



Advisers on matters related to phone-hacking claims

Olswang – acting for News International on the accusations facing NoW and drawing up a new code of practice for the company.

Lord Ken Macdonald QC of Matrix Chambers – instructed by the board of the newspaper's parent company News Corp to give advice in relation to alleged corrupt payments made to police officers by employees of NoW.

Doughty Street Chambers, 11 South Square and Farrer & Co – represented the NoW against allegations from actress Sienna Miller.

Collyer Bristow – advising the mother of a soldier killed in Iraq, two other military families, and a number of politicians, actors and celebrities not yet in the public domain.

Taylor Hampton – acting for the parents of Milly Dowler.

Matrix Chambers, 5RB and Atkins Thomson – advised Sienna Miller on her damages case.

Schillings – acted for football pundit Andy Gray and comedian Steve Coogan.

Mishcon de Reya – representing football agent Sky Andrew, actress Leslie Ash and her husband Lee Chapman.

Grant & Eisenhofer and Bernstein Litowitz Berger & Grossmann – the US firms are advising News Corp shareholders led by Amalgamated Bank in US on claims of corporate governance failures.