The commission said the two companies were active “in different markets” in Austria, Germany, Ireland, Italy and the U.K. – the five European Union countries where pay-TV broadcaster Sky operates. “They compete with each other only to a limited extent, mainly in the acquisition of TV content and in the wholesale supply of basic pay-TV channels,” the commission said in a prepared statement Friday.
As a result, “the commission found that the proposed transaction would lead to only a limited increase in Sky’s existing share of the markets for the acquisition of TV content as well as in the market for the wholesale supply of TV channels” in the five countries.
Fox initiated its $14.3-billion takeover bid last December, reviving an effort to turn its 39% stake in Sky into full ownership of the company. A previous attempt foundered in 2011 amid Britain’s phone-hacking scandal, which prompted a political backlash against Fox owner Rupert Murdoch.
Approval of the new acquisition bid by European authorities had been expected. The transaction is also being scrutinized by British regulators, who are expected to issue a decision in the coming weeks.
21st Century Fox said it welcomed the commission’s decision. “We now look forward to continuing to work with U.K. authorities and are confident that the proposed transaction will be approved following a thorough review process,” the company said.
The European Commission’s assessment focused on three key areas: whether Fox would be able to prevent or significantly limit access of Sky’s competitors to Fox’s other film and TV content; whether Sky would have incentive to stop buying content from Fox’s competitors; and whether Sky would be able to prevent competing channels from accessing its platform. The commission concluded that all such concerns were unfounded.
The British government’s culture secretary, Karen Bradley, had referred the takeover bid to the European Commission at the beginning of March after notifying both Fox and Sky that she was “minded to intervene” on two public-interest grounds: media plurality and commitment to British broadcasting standards.
After inviting further written representations from both companies, Bradley told British lawmakers on March 16 that none of Fox’s arguments had persuaded her to drop her concerns. She said she had therefore issued a European intervention notice, and asked Britain’s regulatory agency on communications, Ofcom, and the Competition and Markets Authority to study implications of the acquisition. The two bodies are to report back to Bradley by May 16.
Although the European Commission holds the exclusive power to assess the proposed takeover’s impact on competition in Europe, E.U. rules allow member nations such as Britain to take “appropriate measures, including prohibiting proposed transactions, to protect other legitimate interests, such as media plurality.”