Labour’s deputy leader, Tom Watson, said that 21st Century Fox’s potential involvement in a sports rights cartel in Europe needed to be considered by the UK competition regulator before a final decision was made on whether to clear the company’s takeover of Sky.
The European commission raided the offices of a number of TV companies across Europe – including Fox and Ziggo Sport, the Dutch subsidiary owned by Vodafone, and the Virgin Media parent Liberty Global – early on Tuesday over concerns that they could “have violated EU antitrust rules that prohibit cartels and restrictive business practices”.
The raid on the offices of 21st Century Fox’s subsidiary Fox Network Group, which has its European headquarters in Hammersmith, London, was understood to include officials from the UK regulatory body the Competition Markets Authority. The CMA sent a separate team to the one that will deliver its verdict to Matt Hancock, the culture secretary, on whether to clear the £11.7bn Sky takeover bid by Fox, the company founded by Rupert Murdoch.
“News that Fox offices in London have been raided by EU officials is concerning,” said Watson, the shadow culture secretary. “Given the CMA is currently preparing its final advice for the secretary of state on the proposed Sky deal, it is important they establish the facts of what has happened here and take it into consideration in their judgment. If Fox has done something to violate EU laws then that should have a bearing on whether the deal receives approval.”
Fox has said that its subsidiary was “cooperating fully” with the investigation, which the EC said did not mean its targets had necessarily committed anti-compeititive behaviour.
Sources close to the company stressed that the raid had nothing to do with the Fox/Sky deal.
“Unannounced inspections are a preliminary step into suspected anticompetitive practices,” the European commission said.
21st Century Fox’s offices have not been raided and a spokesman for Sky, which is a big player in the European sports rights market, also said that none of its offices had been involved in the raids.
Legal experts say the European commission’s investigation into a separate Fox subsidiary is outside the direct scope of the CMA’s investigation, which is looking at media plurality issues relating to the Murdoch family adding Sky News to its control of the Sun and the Times newspapers, and at Fox’s commitment to broadcasting standards.
However, as the Fox businesses are the ultimate responsibility of the 21st Century Fox chief, James Murdoch, whose connection to the phone hacking scandal at the family’s UK newspapers partly derailed the 2010 bid for Sky, the emergence of another potential scandal could not have come at a worse time.
The CMA is due to deliver its final recommendation to Hancock by 1 May, who then has 30 days to decide whether to approve the deal.
“In reality, the [European commission] probe is not going to mean any delay to the Fox/Sky deal,” said one competition lawyer who wished to remain anonymous. “This kind of raid happens near the start of a case, so it is probably two to three years from a decision even if it turns out there is an open-and-shut case.
“At this stage, Fox has to be presumed innocent and there is nothing the CMA is going to be able to look at anyway. It is also hard to see how any competition law violation is relevant to broadcasting standards or media plurality. The CMA already said the historic ‘bad behaviour’ was not at the heart of their evaluation.”
However, public and political campaigners such as Watson, the former Labour leader Ed Miliband, and Vince Cable, the Liberal Democrat leader, have managed to successfully pressure the government into calling for extensive scrutiny against the recommendations of the media regulator Ofcom.
Fox Network Group distributes Fox Sports in a number of markets across Europe and also owns a controlling stake (51%) in the media company that holds the broadcast and sponsorship rights to the Eredivisie, the Dutch premier league.
The remaining stake is owned by the Eredivisie – and Endemol Shine, the creator of Big Brother, which produces the matches and is 50% owned by Fox.
As a result of the arrangement Fox Sports broadcasts all Eredivisie games exclusively in the Netherlands.
Fox Sports also has operations in Italy, as does Sky, where the Italian football league Serie A has so far failed to sell its rights at the price it wanted. Ziggo Sports has the Dutch rights to sports including the English Premier League, Spain’s La Liga and Formula 1.
