High Court refuses judicial review of Ofcom’s ‘fit and proper’ decision in Fox-Sky merger

 

The High Court has dismissed an application for judicial review of Ofcom’s decision that a proposed merger between Fox and Sky would result in Sky not being a fit and proper person to hold its broadcasting licences.

The transaction would result in Fox obtaining 100% of Sky and takes place against allegations of impropriety against Fox. Ofcom found that the conduct alleged of Fox represented a significant corporate failure but that there was insufficient evidence to conclude that, after the merger, Sky would be unfit to hold its broadcasting licences.

The High Court found no error of law in applying the fit and proper test, which was a matter for Ofcom’s judgment. Ofcom must be satisfied that its decision was necessary and proportionate to the interference with freedom of speech that would be a consequence of licence revocation. This is a high threshold and the High Court ruled that it was not irrational to adopt such a standard when deciding whether to revoke a licence of a broadcaster whose businesses depended on the statutory permission.

The High Court also found that it would not lightly interfere with Ofcom’s regulatory judgment. Sky and Fox had shown that they were fit and proper to hold broadcasting licences for several years and Ofcom was not satisfied that there was sufficient evidence to show that Sky would not comply with broadcasting regulation after the merger. The High Court rejected the claim that Ofcom did not give sufficient weight to Fox’s corporate failures as a predicator of future failings. It also dismissed the claim that Ofcom had taken insufficient account of findings while James Murdoch was chairman of Sky in 2012.

The decision is a reminder of the high threshold for judicial review and where significant latitude is afforded to the specialist regulator.

Avaaz Foundation, R (On the Application Of) v The Office of Communications (Ofcom) [2018] EWHC 1973 (Admin), 27 July 2018. (Supperstone J)