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Last Updated: Thursday, 24 May 2007, 10:26 GMT 11:26 UK
Watchdog to probe BSkyB ITV stake
ITV dish
BSkyB bought 17.9% of ITV in November 2006
The government is referring BSkyB's purchase of a 17.9% stake in ITV to the Competition Commission.

The Office of Fair Trading reported in April that the purchase cast doubt on the independence of ITV.

BSkyB's November move effectively blocked cable operator NTL - since renamed Virgin Media - from mounting a takeover bid for ITV.

Virgin boss Richard Branson, consumer groups and the regulator Ofcom have all complained about BSkyB buying shares.

"On the basis of the evidence before me, a fuller investigation by the Competition Commission is justified," DTI Secretary of State Alistair Darling said.

BSkyB said in a statement: "We look forward to engaging with the Competition Commission as the ongoing regulatory process enters its next phase."

Passive shareholder

On the basis of the evidence before me, a fuller investigation by the Competition Commission is justified.
Alistair Darling, DTI Secretary of State

Mr Darling is asking the Competition Commission to consider whether BSkyB's shareholding reduces competition in general and whether it threatens the public interest in terms of limiting the number of groups that control media companies.

If the Commission finds that there is a problem then it could recommend that BSkyB gives up some or all of its voting rights, or reduces the size of its stake.

BSkyB said at the time of the purchase that it saw ITV as a good investment and did not intend to have a material influence on the broadcaster.

ITV has confirmed that BSkyB has been a passive shareholder so far.

But Virgin boss Richard Branson labelled the move "a blatant attempt to distort competition even further by blocking any attempt to create a strong and meaningful competitor".

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