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Mr. Lansley: I am grateful to the Minister for responding so positively and sympathetically to the amendment. I confess that I am still uncertain whether in practice when a court is asked, presumably by way of judicial review, to consider the phrase, "dominant position" in this context, meaning within the United Kingdom, it will look for the legislative means by which the director was empowered to consider the relevant market as subsisting beyond the United Kingdom or to consider dominance within the United Kingdom as a self-contained matter. I take the point that if such matters are not set out in the legislation, the courts can consider them on a Pepper v. Hart basis. On that basis, and given the Minister's comments, I am happy to beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Mr. Giles Radice (North Durham): I beg to move amendment No. 1, in page 10, leave out lines 40 and 41 and insert

8 Jul 1998 : Column 1136


'"dominant position" means a position of economic strength which enables an undertaking to act independently of competition, customers and ultimately consumers within the United Kingdom; and'.

Mr. Deputy Speaker: With this, it will be convenient to discuss the following: amendment No. 8, in page 10, leave out lines 40 and 41 and insert


'"dominant position" means--
(a) in relation to the national newspaper market, a substantial degree of market power, and
(b) in relation to all other markets, a dominant position within the United Kingdom; and'.

New clause 1--National newspapers--


'.--(1) This section shall apply if a monopoly situation exists, within the meaning of section 6 of the Fair Trading Act 1973, in relation to the supply of--
(a) national newspapers; or
(b) national newspapers of any description
And where this section applies, it applies to any person or persons in favour of whom that monopoly situation exists, within the meaning of section 49 (2)(b) of the Fair Trading Act 1973.
(2) Any conduct on the part of any person to whom this section applies shall be prohibited if--
(a) it constitutes an anti-competitive practice, and
(b) it may reduce the diversity and independence of the national newspaper press in the United Kingdom.
(3) For the purposes of this section, an anti-competitive practice is a course of conduct which has, or is intended to have, or is likely to have the effect of restricting, distorting or preventing competition.
(4) The prohibition imposed by subsection (2) is referred to in this Act as the press diversity prohibition.'.

7.30 pm

Mr. Radice: I must remind the Minister and hon. Members what was said on this subject on Second Reading. Many hon. Members, including myself, believe that there is a prima facie case showing predatory pricing by The Times in the broadsheet market. In the past five years, the newspaper has consistently been priced below cost--often considerably below. At the moment, one has to pay only 30p for a copy.

Apparently, that is a special offer for the world cup, or so we are told by the editor. That is not merely a marketing ploy, but a deliberate predatory pricing strategy, the purpose of which is not only to win extra readers but to put The Independent out of business and attract at least some of its readers, so that The Times can get closer to its objective of overhauling The Daily Telegraph.

I said that there was a prima facie case, because we cannot prove it until we have all the facts and figures. It is up to the Office of Fair Trading to prove it. At the moment, the pricing practices of The Times are being investigated by the OFT, although that is under the existing and not the new law.

I am not claiming that other newspapers do not employ some types of predatory pricing, although I would argue that, in most cases, it is a reaction to what The Times has done. Such predatory behaviour is dangerous for the newspaper market. If one paper is knocked out, the market will be less diverse. The practice has an impact on other newspapers in the broadsheet market as most feel the need to react to the actions of The Times, which takes money

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out of the market, which means that there is less profit and less money to spend on journalists and improving the quality of the newspaper.

Mr. Redwood: The hon. Gentleman said that the price of The Times was below cost. What are the costs of The Times?

Mr. Radice: If the right hon. Gentleman knows, he knows more than I do. There have been a number of estimates, but The Times has told us that it is making considerable losses, so I assume that the price is below cost. It is widely thought to be, and that is precisely the purpose of the investigation. I should have thought that the right hon. Gentleman would know that, and I am surprised at his intervention.

Dr. Ladyman: When The Times was previously investigated, the question upon which the case hinged was not whether it had a dominant position, which was being abused. It was understood that the newspaper could be investigated and that it had satisfied that criterion. It was let off the hook because it could not be proved that it was selling below cost. My hon. Friend's amendment would reduce the threshold at which it is necessary to prove dominance, but that was never the question. How will it help with the need to prove that The Times is selling below cost?

Mr. Radice: I will come to that. My hon. Friend is an expert on the matter, having been a member of the Standing Committee.

Dr. Ladyman: I would hardly say that I am an expert. The right hon. Member for Wokingham (Mr. Redwood) was a member of the Committee, and I would not call him an expert.

Mr. David Winnick (Walsall, North): It is not the purpose to have experts in Committee.

Mr. Radice: It makes it more difficult.

I was about to point out that such below-cost pricing makes it more difficult for new newspapers to enter the market, because they have to pay the extra cost of pricing below their costs, which is bad for competition.

The question for us--it also relates to the other amendments in the group--is whether the Bill will enable the Office of Fair Trading to deal effectively with predatory pricing in the newspaper industry. The Lords did not believe that it would: hence clause 19, which was taken out of the Bill in Committee and which dealt with that industry. The Government's case, which they made on Second Reading--they did not make it strongly in the Lords, which is probably why there was such a special clause--was set out by the President of the Board of Trade. I have also read the excellent statement by the Minister of State in Committee. Their case was that the Bill would introduce a tough regime on predatory pricing.

Clause 18 sets out certain conducts, including predatory pricing, which would amount to an abuse of dominant position, and clause 60 sets out various ways in which the principles of European legislation--perhaps this is the point of the intervention by my hon. Friend the Member

8 Jul 1998 : Column 1138

for South Thanet (Dr. Ladyman)--are to be introduced into British law. Those principles are laid down by treaty and by the European Court of Justice. Any decision of that court must be taken into account by the Office of Fair Trading and British courts, which also have to take into account any relevant decision or statement by the Commission. As I understand it, that means that we have to consider cases in Europe.

One famous case was that of Tetra Pak in 1994, which I am sure my hon. Friend the Member for South Thanet knows all about. It said that, if pricing by a dominant firm was below the average variable cost of production, predation should be presumed, and the proof of intent was not required. It also defined "dominant position". One problem is that The Times has only 28 per cent. of the market, and one could argue that that is not a dominant position. However, the Commissioners have made it clear that a dominant position is one in which a firm can act independently of competition, and that it does not specifically relate to market share, so that is a stronger position than we have at present.

Dr. Ladyman: The case to which my hon. Friend refers, which covers freedom to act independently, is that of United Brands v. the Commission, which includes almost identical language to that in his amendment, which makes it superfluous, because that language will be in the Competition Bill as it stands and as the Government propose it to be.

Mr. Radice: If my hon. Friend would listen to my argument before he knocks me down, I should be most grateful.

Mr. Redwood: He already has.

Mr. Radice: We shall see. He thinks so. He is acting in a predatory manner.

Dr. Ladyman: Not, unfortunately, from a dominant position.

Mr. Radice: No, from a sitting position.

My hon. Friend argues that the Bill as it stands provides a powerful mechanism for dealing with predatory pricing. I said on Second Reading that I was impressed by that case, and that I would consider it seriously. I said that I would take the best legal advice. Having spoken to a considerable number of lawyers, I find that, like economists, they have different opinions. There has been some support for the Government's interpretation of the Bill, but also some dissent. The hon. Member for Eastleigh (Mr. Chidgey) is aware of the advice of Richard Fowler QC, the lawyer used by The Independent. Some may say that one can hire one's lawyer to suit the case, but I do not make that point.


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