Speaking today (June 26) at the inquiry into media ethics, Norman Lamb said that News Corp lobbyist Fred Michel warned that Murdoch papers, including The Sun and the News of the World, would turn against his party if Lib Dem business secretary Vince Cable referred the takeover to Ofcom.
Lamb, previously the main adviser to deputy prime minister Nick Clegg, presented a note to the inquiry he had made shortly after meeting Michel in October 2010.
Describing Michel's approach as "brazen", Lamb said the lobbyist had wanted "things to run smoothly" with the Sky bid, but warned that "if it goes the wrong way" he was "worried about the implications".
The note added: "It was brazen. VC [Vince Cable] refers bid to Ofcom, they turn nasty."
Lamb claimed that the threat was offset with an enticement should Cable allow the Sky bid to proceed unhindered.
He said that it was proposed that The Sun would help persuade voters to back the Lib Dem's alternative voting (AV) system of proportional representation, which had been key to the party's coalition deal with the Conservatives.
Lamb told Lord Justice Leveson that got a "very clear understanding" from the meeting with Michel that News Corp's UK newspapers had been supportive of Lib Dems in the past, but that positive coverage could change quickly.
The note's final sentence says: "Implication was clear, News Int turn against coalition and AV [if bid does not go through]".
In another note, Lamb said that Clegg had been "horrified" to hear what Michel allegedly said in the meeting. Clegg is said to have fretted: "We will lose the only papers who have been positive."
Rhodri Davies QC, counsel for News International, insisted that Michel had never made any kind of threat, explicit or implicit, to Lamb about the proposed Sky bid.
However, Lamb's evidence follows statements to the Leveson Inquiry by Cable that he was made aware by his party colleagues of "veiled threats" that had allegedly been made about the stance of News Corp newspapers should he refer the bid to Ofcom.
> Vince Cable considered Sky bid with 'independent mind'
Cable ignored the threats and asked media regulator Ofcom to review the bid.
Consequently, in December 2010 he was stripped of the power to arbitrate over the £8bn Sky takeover after being secretly recorded by Daily Telegraph undercover reporters saying that he had "declared war" on Murdoch's media empire.
News Corp ultimately withdrew its bid for the 39.1% of Sky that it did not already own, due to public pressure following the phone hacking scandal at its UK papers.