The shares have lost more than a quarter of their value since BSkyB purchased them and the Murdoch family-controlled company would lose £250 million on the sale at today's prices.
The Government, though, has agreed to keep secret the timescale in which BSkyB must sell the shares after the company argued that the markets knowing when it had to sell would affect its commercial interests.
BSkyB must now bring its 17.9% shareholding down below 7.5% and must not seek or take a position on the company's board and must not re-purchase shares in the company.
"This transaction results in a substantial lessening of competition within the UK market for all television," said the findings of BERR minister John Hutton.
BSkyB bought its stake in ITV in November 2006 in a move widely seen at the time as being a blocking manoeuvre against NTL's takeover bid for the company. At the time, ITV had no chairman.
It rejected the takeover bid and soon appointed Michael Grade as chairman but the share price continued to fall, from the 135 pence at which BSkyB bought its stake to 73p today.
The Department for Business, Enterprise and Regulatory Reform (BERR) has backed the findings late last year of the Competition Commission that the shareholding is not in the public interest.
Virgin Media, the result of a merger between NTL and Virgin Mobile soon after the acquisition of the stake, argued to the Government that its conclusion should be based on the assumption that as ITV and BSkyB were under common ownership, they were effectively the same company.
"The Competition Commission considered this argument but concluded that this interpretation should not be adopted," said the Department of BERR's ruling. "The Competition Commission gave particular consideration to whether BSkyB’s major shareholding in ITV could result in ITV editorial staff seeking to take account of the views and interests of BSkyB when considering issues of editorial policy. They concluded that in practice, the strong culture of editorial independence within ITV makes this unlikely."
The Government decided that the market for news was not adversely affected, but that the market for all television was.
Giles Warrington, a competition law specialist at Pinsent Masons, the law firm behind OUT-LAW.COM, said that BSkyB might challenge the ruling based on a precedent set in the drinks industry.
"BSkyB has already argued to the Commission that its finding that it had jurisdiction to review the acquisition under the merger control rules was unprecedented," said Warrington. "When Interbrew, now InBev, acquired Bass Brewers in 2000 without waiting for UK competition approval the Competition Commission recommended that Interbrew be required to divest Bass Brewers."
"This recommendation was overturned on appeal on the grounds that Interbrew had not been sufficiently consulted about a proposed alternative remedy. Ultimately, an alternative remedy was agreed. One line of attack BSkyB may attempt could surround the Commission's rejection of its proposed alternative remedies, such as placing its shares into a voting trust," he said.
