BSkyB's acquisition of a 17.9 per cent stake in broadcaster ITV restricts competition, regulators announced today.
In a statement the Competition Commission said that the pay-TV company's purchase of a stake in the UK's biggest free-to-air commercial broadcaster was therefore against the public interest.
The commission said it had provisionally concluded that BSkyB's share in ITV would be likely to result in a "substantial lessening of competition" by giving it the ability to influence the broadcaster's strategy.
Britain's competition watchdog explained that as BSkyB faced competition from the company it could, as the broadcaster's largest shareholder, "take advantage of opportunities to weaken ITV" or prevent it from taking actions that threatened its own interests.
However the Competition Commission said it did not feel BSkyB's shareholding in ITV would give rise to competition concerns in other areas such as advertising and TV news provision.
"The acquisition has made BSkyB ITV's largest shareholder by some margin and whilst our provisional view is that this would not necessarily affect day-to-day operations, BSkyB would be able to influence ITV's key strategic decisions, particularly relating to investment, whether in content, capacity or new technology," said commission chairman Peter Freeman.
Business and enterprise secretary John Hutton will now be charged with deciding what action should be taken in response to the Competition Commission's final report, which will be sent to him by January 2nd 2008.
In response to the commission's provisional findings BSkyB said: "We will continue to engage with the commission during the remainder of this process."
BSkyB bought its stake in ITV for £940 million last November, effectively blocking cable group NTL now trading as Virgin Media from merging with the broadcaster.