The acquisition of BSkyB (BSY.L) by News Corporation is set to be referred to the Competition Commission by the culture secretary Jeremy Hunt.

In a speech at Parliament, Hunt said the 'proud tradition of journalism' in the UK had been shaken by events at the News of the World.

He confirmed two independent inquiries would take place and said the acquisition had been referred 'with immediate effect'.

Crucially, Hunt today contacted regulator OFCOM for advice on whether the claims over police bribery and phone hacking were enough, in themselves, to raise questions over whether the company is ‘fit and proper’ to hold a broadcasting licence.

The news broke as News Corporation announced it had withdrawn proposed undertakings to avoid competition laws, which had included spinning off Sky News. News Corporation, headed by Rupert Murdoch, announced that it was 'ready to engage with the Competition Commission on substance'.

In a market statement, the company revealed that it believed there would not be 'insufficient plurality' in UK news provision.

Shares in the broadcaster dropped 4.6 per cent at 715.5 pence on the news, despite the fact that Goldman Sachs had earlier issued a ‘buy’ recommendation on the stock.

Additional reporting by Joe McGrath.