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

• Jurisdiction: Ireland
• Parties: Hughes,News Corporation
• Date: 09 October 2003
• Decision Date: 09 October 2003
• Status: Cleared (Phase 1)
• Court: Competition and Consumer Protection Commission (Ireland)
• Decision Number: M/03/030

Determination of the Competition Authority

Determination No. M/03/030 of the Competition Authority, dated 9 October

2003, under Section 21 of the Competition Act, 2002

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.

1