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Senior executives of Ofcom, the communication regulator, claim in private that they do not expect to be asked by Patricia Hewitt, Trade and Industry Secretary, to intervene in the £665 million takeover.
This means that clearance for a takeover of The Daily Telegraph by Sir David and Sir Frederick Barclay — representing one of the most expensive deals to buy a British newspaper — is a formality.
The Telegraph takeover is the first major media deal to be concluded under the rules set out by the 2003 Communications Act. That introduces a newly defined “public interest” test that must be carried out by Ofcom, on top of existing competition tests.
A senior Ofcom official told The Times that “we’re relieved not to be examining the takeover of The Telegraph”, making it clear that the subject was deemed to be major political minefield.
The official added: “The signals we’re getting from the Government are pretty clear.”
Stephen Carter, chief executive of Ofcom, is also against an inquiry. Although he has not made any public comment on the subject, Mr Carter is thought to believe that intervention by Ofcom would damage The Telegraph because it would delay commercial decisions while the new owners negotiated with the regulator.
The public interest test could add new uncertainty to media mergers, because its judgments are more subjective than those made on competition grounds. The test’s purpose is to ensure that a newspaper or broadcaster’s new owners are good employers, who believe in the fair and accurate presentation of news, and who do not interfere in editorial decisions.
However, not everyone shares the view of Mr Carter and other senior Ofcom staff.
Some members of Ofcom’s board feel that all big media takeovers should be subject to the public interest test, even where there are no obvious grounds for blocking a deal on that basis. The result would be to build up a body of information and precedent that would inform controversial cases.
Available evidence suggests that the Barclay twins would pass a public interest test. Their ownership of The Scotsman has raised few complaints from employees, or rivals, and the men are very much seen as hands-off proprietors.
In theory, it is still possible for Ms Hewitt to intervene, but it is not clear what could emerge to make her want to do so. She has ten working days once the Telegraph takeover is notified to the Office of Fair Trading, the competition regulator. Yesterday, the DTI said that the OFT was yet to be notified by the Barclays.
Ms Hewitt’s expected decision implies that relatively few media mergers will be subject to the “public interest” test — echoing the position before the Communications Act. Before the Act came into force, late last year, media mergers could be blocked on similar, but less well-defined, grounds by the DTI acting in isolation. Only a few were blocked in this way — the last one being a proposed acquisition of the Bristol Evening Post by David Sullivan, the pornography publisher, in 1990.
All the Barclays have to do is satisfy the OFT that there are no competition issues that emerge with their ownership of the Telegraph. Their ownership of The Scotsman and The Business is not seen as significant enough to be a problem.
Both Ofcom and the DTI declined to comment.
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