Decision Nº M/03/030 from Competition and Consumer Protection Commission, 2003-10-09

CourtCompetition and Consumer Protection Commission (Ire)
PartiesHughes,News Corporation
Date09 October 2003
Decision Date09 October 2003
StatusCleared (Phase 1)
Decision NumberM/03/030
Determination of the Competition Authority
Determination No. M/03/030 of the Competition Authority, dated 9 October
Notification No. M/03/030 – Acquisition of a shareholding interest in Hughes
Electronic Corporation by News Corporation Limited
Introduction
1. On 10 September 2003 the Competition Authority, in accordance with Section 18
(1) of the Competition Act, 2002 (“the Act”) was notified, on a mandatory basis,
of a proposal whereby News Corporation Limited (“News”), via affiliates, would
acquire a 34% shareholding interest in Hughes Electronic Corporation
(“Hughes”). The Authority, in accordance with s 23(1)(b) of the Act, notified the
parties that it considers the transaction to be a media merger.
2. In examining this matter, the Authority considered submissions from the parties
and other information to determine whether the transaction would put News in a
position to control Hughes and thereby constitute a merger or acquisition for the
purposes of s 16 of the Act. The Authority found that in acquiring a 34% interest
in Hughes, News would acquire control of Hughes pursuant to s 16(1)(2) of the
Act because control of various United States Federal Communications
Commission licences and authorisations held by Hughes, including direct
broadcast satellite (DBS), fixed satellite space station, earth station and terrestrial
wireless licenses or authorisations would be transferred to News as part of the
transaction. The Authority found that by gaining control of these assets that are
integral to Hughes operation, News will be capable of exercising decisive
influence in regard to the activities of Hughes and accordingly, will acquire
control of Hughes. In reaching this view, the Authority also took into
consideration the fact that News would be the largest single shareholder of
Hughes, with all but one of the other shareholders being institutional investors
holding no more than 3% of shares. Furthermore News representatives would
hold significant management positions, including Chairman of the Board and the
Chief Executive Officer. The Authority also took into account that while News
would only acquire 34% of shares and was subject to certain standstill clauses,
those prohibitions on increasing its shareholding would cease if another entity
obtained a significant shareholding within Hughes, thus enabling it to protect an
existing controlling interest.
The Parties
3. News is a diversified international media and entertainment company with
operations in a number of industry segments, including filmed entertainment,
television, cable networking programming, magazines and inserts, newspapers
and book publishing. Within Ireland, News’ principle business consists of
newspaper printing and sales. It sells The Irish Sunday Times, The Irish Sun,
The Irish News of the World and The Times in Ireland. It also owns
approximately 35 % of the issued shares in BskyB.
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