BSkyB could be forced to cut its holding in ITV to less than 7.5 per cent after it suffered a double defeat in a tribunal hearing yesterday.

The Competition Appeal Tribunal ruled that John Hutton, the Business Secretary, and the Competition Commission were wrong to conclude that Sky’s purchase of a 17.9 per cent stake in ITV did not have an impact on media plurality.

“In our view there is no substance in Sky’s complaint,” the tribunal said in a written judgment rejecting Sky’s arguments that the Commission should have imposed some lesser remedy.

The verdict means that the tribunal believes there was a possibility that Sky could exert influence on ITV’s news output. News Corporation, parent company of The Times, has a 39.1 per cent stake in BSkyB.

The tribunal also upheld a second decision that the stake purchase – made in November 2006 – contravened competition rules.

Mr Hutton and the Competition Commission had told Sky to cut its shareholding in ITV to 7.5 per cent. Sky paid £940 million, or 135p a share, to buy the stake when ITV was facing a takeover approach from NTL, the cable group, now called Virgin Media. ITV’s shares have tumbled since then, closing down 3p at 41p yesterday. If Sky were forced to sell at that level, it would crystalise a loss of about £380 million.

Because the tribunal found that the stake purchase also breached the rules governing media plurality, it could impose a stiffer penalty on Sky. The tribunal said that it would consider “the effect [if any] of our decision on the existing remedy imposed”.

The tribunal said that it would consider whether it needed to revise the original conclusions, which could mean that Sky would have to sell more ITV shares. That, in turn, would make ITV potentially vulnerable to a takeover bid.

RTL, the European broadcaster that owns Five, Endemol, the producer of Big Brother, and Mediaset, the broadcaster controlled by Silvio Berlusconi, the Italian Prime Minister, have expressed tentative interest.

Becket McGrath, a competition lawyer with Berwin Leighton Paisner, which is independent of all parties in the case, said: “The logic of the approach taken could mean that Sky would be forced into selling more shares.”

The parties will now have to submit arguments regarding the Virgin Media appeal by October 6 and if there is a hearing it will be held on October 15.

However, it is not certain that Sky will face a stiffer penalty as a result.

Mr McGrath said: “It would be curious if the tribunal concluded that it was OK for Sky’s shareholding to be reduced to 7.5 per cent on competition grounds but that it had to be reduced to zero to satisfy the need for media plurality. The penalty for both ought to be the same.”

The verdict was a narrow victory for Virgin Media, the cable company that had appealed, arguing that Sky’s penalty was too lenient and, in particular, that Mr Hutton and the Competition Commission were wrong to ignore the possibility that ITV News would fall under the control of Sky.

Sky, meanwhile, is expected to make a further appeal against the ruling, although it was not clear last night if it first would exhaust the remaining part of the tribunal process. Sky said that it would “review the judgment carefully and decide on the next steps in due course”.

A Virgin Media spokesman said: “ITV’s independence has been compromised for nearly two years as a result of Sky’s actions. We’ve consistently maintained that this undermined the plurality of the UK’s media and reflected a systematic effort to suppress competition.”

When it bought the shares in ITV, Virgin Media was trying to negotiate a takeover of the broadcaster behind Coronation Street. ITV said that it welcomed the judgment and awaited the next steps in the process.

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