BSkyB faces Amstrad probe

BSkyB faced more regulatory scrutiny today after the City watchdog said it would investigate the broadcaster’s £125m (€185m) takeover of Alan Sugar’s Amstrad.

The Office of Fair Trading (OFT) will look at the deal due to the close relationship between the firms, with Amstrad already supplying 30% of Sky’s set-top boxes.

The OFT said it will consider whether the deal results in a “substantial lessening of competition”. It has the power to refer the deal to the Competition Commission for a full probe.

The Competition Commission is already looking into Sky’s 17.9% holding in ITV after the Office of Fair Trading and Ofcom said the stake raised “significant” competition and public interest concerns.

Sky’s move last November to snap up the ITV shares caused controversy after scuppering Virgin Media’s ITV merger plans, drawing fire from major Virgin Media shareholder Richard Branson.

Media regulator Ofcom is also conducting a consultation on proposals from BSkyB and National Grid Wireless to replace Sky’s free channels with pay TV services on the digital terrestrial television platform.

BSkyB announced its proposal to buy Amstrad at the end of last month.

Brentwood-based Amstrad generates around three-quarters of its revenues from the sale of set-top boxes to BSkyB, which has worked closely with Amstrad over many years. The broadcaster – 39.1% owned by Rupert Murdoch’s News Corporation - said it would benefit from an in-house design and development capability.