The Barclay family face a possible government inquiry into their £1 billion bid to regain control of the Telegraph titles.
Sir Frederick and his twin, the late Sir David Barclay, bought The Daily Telegraph and The Sunday Telegraph in 2004 but lost control of the publications after a dispute over debt with their lender, Lloyds Bank.
The family are seeking to satisfy demands from Lloyds by raising funding of £1 billion from a senior royal in the United Arab Emirates.
Lloyds has launched a formal sale of the Telegraph after seizing the papers in June, but a satisfactory offer to settle the dispute from the Barclays could derail the auction and allow them to regain control of the newspapers. Legal experts told The Times the Barclays’ funding could prompt a regulatory investigation, if Lloyds agreed to their offer, into whether the new financial structure would hand the UAE backer influence that went against the public interest.
The Department for Culture, Media and Sport can issue a public interest intervention notice (PIIN) on new financial arrangements for media assets to assess whether they pose a threat to competition, freedom of speech, the range of available media content or the accuracy of news. The inquiry would be carried out by the media regulator, Ofcom, and the markets regulator, the Competition and Markets Authority. The CMA’s guidance on its jurisdiction to investigate mergers states it can examine funding arrangements that provide “material influence” to a new party.
Advertisement
The guidance states: “Financial arrangements may in certain circumstances confer material influence where the conditions are such that one party becomes so dependent on the other that the latter gains material influence over the company’s commercial policy — for example, where a lender could threaten to withdraw loan facilities if a particular policy is not pursued.”
A spokesman for the Barclay family said the proposal made to Lloyds “concerns the settlement of outstanding loans”. He added: “There is no precedent and no basis for a PIIN being issued in relation to a debt transaction, and we are highly confident that the family’s proposal would not trigger any regulatory reviews regarding the ownership of the media assets.
“We continue to believe that our proposal offers Lloyds Banking Group and its shareholders the most compelling, straightforward and speedy resolution to this situation.”
One legal expert said: “They are getting money from the UAE and that is a new financing arrangement. And that’s what gives rise to material influence, and therefore makes a public interest intervention notice suitable. It’s very clear there are these financial arrangements that need to be looked at.”
