(6 years, 10 months ago)
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The Advocate-General for Scotland (Lord Keen of Elie) (Con)
My Lords, with the leave of the House, I will repeat a Statement made in the other place by my right honourable friend Matt Hancock, the Secretary of State for DCMS. The Statement is as follows:
“Mr Speaker, I am here in my new capacity as the quasi-judicial decision-maker in relation to the proposed merger between 21st Century Fox and Sky Plc to update the House regarding the CMA’s interim report that it has issued today. The decision-making role is one that my right honourable friend the Member for Staffordshire Moorlands discharged, having met her commitment—given many times on the Floor of this House—to the greatest possible transparency and openness the process allows. And while I come to this fresh, I intend to follow the process of being as open as possible while respecting the quasi-judicial nature of the decision.
As this House well knows, after the proposed acquisition was formally notified to the competition authorities last year, my right honourable friend the Member for Staffordshire Moorlands issued an intervention notice on media public interest grounds; namely, of media plurality and genuine commitment to broadcasting standards. This triggered a phase 1 investigation of the merger, requiring Ofcom to report on the specified public interest grounds and the CMA on jurisdiction. Having received advice from Ofcom and the CMA, in September she referred the proposed Sky-Fox merger to the CMA for a phase 2 investigation on both grounds.
The original statutory deadline for the final report was 6 March, but the CMA has today confirmed that this will be extended by a further eight weeks and that the revised deadline is 1 May. Once I have received that final report, I must come to a decision on whether, taking into account the specified public interest considerations of media plurality and genuine commitment to broadcasting standards, the merger operates or may be expected to operate against the public interest. Following receipt of the final report, I will have 30 working days in which to publish my decision on the merger, so if I receive the CMA’s report on 1 May that would be 14 June.
To be clear, the publication today is the CMA’s provisional findings. I have placed a copy in the House Library. With regards to the need for a genuine commitment to broadcasting standards, the CMA provisionally finds that the merger is not expected to operate against the public interest. On media plurality grounds, the CMA’s provisional finding is that the merger may be against the public interest. It cites concerns that the transaction could reduce the independence of Sky News and would reduce the diversity of viewpoints available to, and consumed by, the public. It also raised concerns that the Murdoch Family Trust would have increased influence over public opinion and the political agenda.
The CMA has identified three remedy approaches and seeks views from interested parties on them. These remedy approaches are: first, to prohibit the transaction; secondly, to undertake structural remedies either to recommend the spin-off of Sky News into a new company, or to recommend the divestiture of Sky News; and thirdly, behavioural remedies that could, for example, include enhanced requirements around the editorial independence of Sky News.
The CMA also recognises that the proposed acquisition of Fox by Disney could address concerns set out in the provisional findings. However, the uncertainty about whether, when, or how that transaction will complete means the CMA has also set out potential approaches, which include introducing remedies which would fall away subject to the Disney-Fox transaction completing.
The CMA has invited written representations on the provisional report’s findings and the potential remedy approaches with 21st Century Fox and Sky—as well as other interested parties—before producing a final report. As such, and given the quasi-judicial nature of this process, I hope the House will understand that I cannot comment substantively on the provisional report before us and I must wait for the final report before I comment. I am, however, aware of the keen interest of the House in this important matter. I know that right honourable and honourable Members will be closely scrutinising the CMA’s provisional findings and will have views on them.
The CMA’s investigation will continue over the coming weeks. It has set out the process for making representations on the remedy options outlined and on the provisional findings, with deadlines of 6 February and 13 February respectively. I feel sure that today’s debate will provide helpful context for that work.
What I am able to confirm today is that I will undertake to keep the House fully informed and follow the right and proper process, considering all the evidence carefully when the time comes to make my decision on receipt of the CMA’s final report. I commend this Statement to the House”.
My Lords, that concludes the Statement.
Lord Stevenson of Balmacara (Lab)
My Lords, I thank the noble and learned Lord for repeating the Statement made by the Secretary of State in another place. I take this opportunity to congratulate Mr Matt Hancock on his appointment and pay tribute to the fact that, on this issue, he says he intends to continue his predecessor’s practice of being as open as possible while respecting the quasi-judicial nature of the decision. In this regard, I respectfully request that the Minister suggests to the new Secretary of State that he might wish to continue the informal all-party meetings with Members of your Lordships’ House, which were very helpful in previous rounds of this and related issues. We would welcome that.
As we have heard, the provisional findings of the CMA are that if the Fox-Sky merger went ahead as proposed, it could be against the public interest. It would result in the Murdoch family having too much control over news providers in the UK and too much influence over public opinion and the political agenda. I do not think that there can be much dispute about that. We now move on to a public consultation of possible remedies, which I am sure will attract a great deal of attention, as did the original investigation, with some 16,000 responses.
The Statement that we have just heard did not, for obvious reasons explained by the noble and learned Lord, go into the detail of the possible remedies, but I think it is worth commenting that, even at this stage, it is fairly clear that the CMA largely discounts what are called “behavioural remedies”, which are largely firewalls aimed at keeping entities and their information separate within a merged group. We agree that that would not be a preferred solution. Secondly, the CMA is unenthusiastic about structural remedies; namely to either spin off Sky News into a new company, or recommend the divestiture of Sky News, as this may threaten the viability of Sky News. This is something that has already been threatened: indeed, it is interesting to note that the CMA warns parties that the closure of Sky News while the investigation is ongoing would not be permitted. We are left, therefore, with the third recommendation which is out for consultation, which is the prohibition of the transaction. We think that that is the right solution.
Clearly, a lot of this is dependent on whether and when the sale of Fox to Disney goes ahead. It is subject to considerable regulatory issues in the United States and we do not know enough about what the final structures will be; we therefore have to wait. It is a complicated issue on its own without these other factors intervening, and it is good that the CMA seems to be on top of this, keeping a watchful eye on it and making sensible proposals in the eventuality of this coming through within the timescale of its review. The most surprising issue in the Statement is that the CMA says it is not concerned about the proposed merger on broadcasting standards grounds. I make two points here.
We have argued consistently that the fit and proper person test of individuals who seek to acquire and operate a broadcasting licence is central to having a fair and plural press in this country. However, the test itself is flawed and outdated and needs to be revised. I refer the noble and learned Lord to amendments to the Digital Economy Act which we debated in the last Parliament and which we withdrew on the basis that the Government were considering amending the current provisions and would be looking at this in the near future. I do not think it would be difficult to find a way of bringing into the 21st century a system which, after all, is similar in many respects to the one routinely operated in the financial sector. Will the Government consider this? If so, will they tell us when they will bring forward some recommendations?
Secondly, we have consistently said that if we are to reach a proper assessment of the broadcasting standards question as it affects the Murdoch Family Trust and others, we need to get to the bottom of the corporate governance issues that gave rise to the original Leveson report and should be looked at again as part of part 2 of the Leveson inquiry. I am trying to be helpful here to the noble and learned Lord—I hope he will not need to be reminded that, as a result of amendments in the name of the noble Baroness, Lady Hollins, which were agreed by this House to the Data Protection Bill, the Government are likely to be required to carry out a review of this type one way or the other. Once Sir Brian has reviewed the recent consultation responses on this issue, I urge the Government to simply get on with it.
Lord McNally (LD)
My Lords, I associate myself with the points made by the noble Lord, Lord Stevenson, about the second stage of Leveson and also the remedies that have already been put forward on media regulation. I welcome this Statement and the ongoing commitment of the Secretary of State to keep both Houses informed. I also appreciate the continuing interest of the Minister in this House, the noble and learned Lord, Lord Keen, in the matter. Like the noble Lord, Lord Stevenson, I would welcome a continuation of that informal dialogue. We welcome the interim findings concerning the public interest not being served in terms either of diversity or the influence of the Murdoch Family Trust.
On the commitment to broadcasting standards, I share the concern and puzzlement of the noble Lord, Lord Stevenson. I find it odd that in terms of commitment to broadcasting standards, the proposed merger does not operate against the public interest, echoing an earlier and very disappointing finding by Ofcom. In three continents over 60 years—in Australia, the UK and the USA—Mr Murdoch has been a major factor in lowering standards in both print and broadcast media. I am pleased that the Secretary of State is taking his time to think and consider. Frankly, he has been a little too eager to shoot from the hip in his first few days in office, so this more considered response is welcome.
I still believe that a healthy media ecology rests on a mantra of quality, diversity and choice. All three are threatened by an extension of Murdoch power. It is important to defend the integrity of Sky News, where the lack of 100% control has mitigated against the Murdoch effect. But the Secretary of State needs to go further and consider carefully how we protect our public service broadcast news on the BBC, ITV and Sky News. We need to review the protection of news sources in the light of the impact of new technologies. Here again, Ofcom needs to be proactive in reviewing and bringing advice on these matters.
We must also keep an eye on the implications of the Disney takeover of Fox. Does the Minister have a timetable or guesstimate about how soon the US authorities will come to their conclusions? For we must make sure that any remedies to protect the public interest are real and effective, not simply fig leaves to cover up a surrender to big media power. This is a welcome Statement but it is not the end of the matter. We need a robust Secretary of State to defend the public interest but, on that, I am afraid the jury is still out.
Lord Keen of Elie
I am obliged to the noble Lords for their observations. I note that the noble Lords, Lord Stevenson and Lord McNally, would both like to see a continuation of the informal all-party meetings that have taken place. I will of course pass that to the new Secretary of State for his consideration.
I cannot comment upon the terms of the provisional report and I know that Members of this House would not expect me to do so. The final decision will be a quasi-judicial decision for the Secretary of State, one which he will make in the light of the final report and in respect of which he will give reasons. With regard to the Fox-Disney transaction, both Disney and 21st Century Fox have stated clearly that the intention is for 21st Century Fox to continue with its bid of December 2016 before the Disney acquisition is completed. But I am not in a position, any more than any other of your Lordships, to determine when that final process will be completed. It will be subject to procedural issues in the United States of America, quite apart from anything else.