The dispersion of bubbles into down-flowing liquids is often encountered in a number of industrial applications involving pipe flow, bubble columns and loop reactors. Usually a gas horizontal sparging device is used to generate bubbles that are carried downward with the bulk liquid flow. At low gas flowrates discrete bubbles are formed. However, at higher gas flowrates a ventilated cavity attached to the sparger is formed. For downward pipe flow the liquid forms an annular jet, which entrains gas into the recirculation region immediately beneath the ventilated cavity. The rate of gas entrainment and the size of the bubbles produced is determined by the pipe diameter, liquid and gas volumetric flowrates and the strength of the recirculation region below the base of the ventilated cavity. In this study a model was developed to predict the liquid velocity field and bubble breakup in the recirculation region. The velocity profile was modelled using the potential flow solution of the Hill's vortex, where the strength of the vortex was assumed to be directly proportional to the velocity of the annular wall jet. The proportionality constant was found to be 0.38, based on predictions obtained using the commercial code CFX. The CFX velocity profile predictions for the central part of the recirculation region were very similar to the Hill's vortex velocity profile. Bubble breakup was modelled using a critical Weber number concept, based on the predicted velocity profile within the recirculation region. It was found that the prediction of bubble size was in general agreement with experimental observations when a critical Weber number of 4.7 was assumed. A digital high-speed video was used to observe the liquid and bubble motion at the base of the ventilated cavity. The video was used to obtain estimates of the recirculating liquid flow velocity, which compared reasonably well with predictions based on the Hill's vortex model. The video evidence also highlighted the unsteady nature of the flow, particularly the actual gas entrainment process, and possible reasons for this behaviour are presented.