Sir Richard Branson is set for a bruising battle with James Murdoch, the chief executive of BSkyB, after the satellite group’s acquisition of a 17.9 per cent stake in ITV.

The billionaire founder of the Virgin Group and 11 per cent shareholder in NTL is expected to complain this week to competition authorities and the Government about BSkyB’s purchase. NTL is considering a £6 billion swoop on ITV but now will not be able to acquire a 100 per cent stake.

Sir Richard asserted in a statement that BSkyB’s move was “a blatant attempt to distort competition”. A spokesman for Sir Richard said that the Virgin founder could go to Ofcom, the communications regulator, to complain that the purchase was a potential breach of competition legislation, the Communications Act and the Enterprise Act, and that there were plans to go to the Office of Fair Trading (OFT).

BSkyB, which is 39.1 per cent owned by News Corp, the parent company of The Times, rejected Sir Richard’s claims. A BSkyB spokesman said: “We are fully compliant with both the spirit and the letter of the law.”

Sir Richard said: “Among a very large number of potential breaches of competition legislation and the Communications Act, at the very least we believe the OFT must intervene on the grounds that this is a breach of the general merger provision of the Enterprise Act (2002).” He added that he regarded the BSkyB move as seriously damaging the interests of viewers, programme makers, artists and shareholders and that “the time has come for regulators, politicians and consumers to finally show that they’re willing to stand up to reckless and cynical attempts to stifle competition and secure creeping control of the British media”.

Last night a statement from BSkyB countered: “Sky rejects Sir Richard’s assertion that Sky needs to be stood up to. In its short history, Sky has increased competition in the fast-changing media and now broadband and telephony sectors and has consistently been first at giving consumers more choice in entertainment and a wide range of innovations that they enjoy.”

Sources close to BSkyB provided further insight into the details of Morgan Stanley’s purchase of the ITV stake. It is understood that Morgan Stanley approached about 15 shareholders, but only a handful wanted to part with some or all of their holdings for the offer of 135p a share. Although Fidelity was one seller, there was uncertainty yesterday about whether Brandes, which has 8 per cent of ITV, decided to sell its stake. Senior sources suggested that Brandes had refused to sell. An RNS announcement detailing which shareholders sold their holdings is expected today.

NTL sources said yesterday that the cable operator was in discussions with its advisers at Goldman Sachs and JPMorgan over the weekend and was reviewing its position. A decision is expected this week. BSkyB’s purchase of the stake in ITV came only days after it emerged that NTL was considering its own offer for ITV. The satellite broadcaster has pledged not to make a full bid, but, under media rules, can go up to 19.9 per cent and has not ruled out a further share purchase. It was not clear whether NTL would proceed with its £6 billion bid, although it is difficult to see how it can, now that Sky holds a stake large enough to prevent anybody else achieving 100 per cent control. NTL recently acquired Sir Richard’s Virgin Mobile for £960 million and plans to change its name to Virgin Media in the new year.

On Friday Sky paid 135p a share for its ITV stake, a 20p premium to the 115.75p closing share price and well above the 125p a share that NTL was thought to be considering for its own offer.

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