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Dr. Ladyman: Will the hon. Gentleman give way?

Mr. Chidgey: I could see the hon. Gentleman's enthusiasm mounting. In a spirit of generosity, I am delighted to give way.

Dr. Ladyman: Far be it from me to suggest that the learned gentleman whom the hon. Gentleman quotes was talking poppycock, but he claims that in Europe there is a high threshold for establishing a dominant position. It is clear from what the Commissioners have said that, under some circumstances, they would regard a 20 per cent. market share as dominance. Does the hon. Gentleman seriously suggest that less than 20 per cent. should still be considered dominant?

Mr. Chidgey: I am somewhat confused by that question. I think that the hon. Gentleman referred to me as learned, or perhaps it was to someone else. He accused a leading counsel with an international reputation of talking poppycock. I cannot comment on that, but the opinion is on the record. It differs from the Government's legal opinion, but where there is conflicting legal opinion, there is a problem with legislation. If he contains his enthusiasm while I continue my remarks, I think that I shall be able to demonstrate why that is important.

Mr. John Hayes (South Holland and The Deepings): Will the hon. Gentleman give way?

Mr. Chidgey: We have a new face in the Chamber. What a pity the hon. Gentleman was not here for the opening remarks. Nevertheless, I shall be generous and allow him to contribute.

Mr. Hayes: The hon. Gentleman's generosity is clearly not matched by his courtesy. My point supports what he said. He will be pleased to learn that not only leading counsel but European case law supports his argument and not that of the hon. Member for South Thanet (Dr. Ladyman).

Mr. Chidgey: I am grateful for that point. I quickly withdraw any discourtesy. I was perhaps momentarily excited; it was meant merely as part of the usual cut and thrust of our friendly behaviour in the Chamber, particularly at this hour.

I contend that counsel's advice is clear. The comfort that Ministers have held out on the adequacy of clause 18 is illusory. It will leave untouched a range of anti-competitive practices that could threaten the diversity of the press. Those threats will remain unless the House enacts specific safeguards against them.

It has been argued that it is wrong to use legislation to target a particular case--an issue addressed several times in Committee. Ministers argued that legislation should provide a general framework, and should not be used to target individual abuses by individual companies or even

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against individual companies. That is clearly right. A vital aspect of press diversity is that the market should be open to newcomers.

The amendments are couched sufficiently generally not to prejudge the facts of any particular case. Findings of fact are for the relevant enforcement authorities, not the legislators. The purpose of the amendments is to establish a general safeguard for press diversity and make it a new and free-standing responsibility of the Director General of Fair Trading, and, as necessary, the new Competition Commission.

I am concerned about how the Minister may respond on new clause 1. I trust that the House will welcome its provisions. Its purpose is to stand in place of, and improve on, the clause 19 that was added to the Bill in another place before it reached Committee here and the Government were able to remove it through their votes there.

New clause 1 would prohibit any anti-competitive practice that threatens to reduce the diversity of the national newspaper press, but only if the author ofthat practice enjoys a monopoly situation. Both "anti-competitive practice" and "monopoly situation" have existing statutory definitions, in the Competition Act 1980 and the Fair Trading Act 1973 respectively. Therefore, their meaning will already be familiar to the business community affected by the Bill.

Let me deal with the question of dominant position and monopoly situations. On Second Reading and in Committee, Ministers criticised the original clause 19, because, it was claimed, it relied on a special definition of a dominant position, including any

Ministers claimed that the clause was too wide, because, they said, practically any established newspaper will hold substantial market power.

The new clause meets that criticism by confining its reach to monopoly situations as defined in the Fair Trading Act, which entails a market share of 25 per cent., which is common knowledge. The scope of the new clause is thus confined within existing strategy limits. Surely nobody would argue that practically any established national newspaper company will hold a market share of 25 per cent.

8 pm

Turning to the definition of the abuse that will be prohibited, the old clause 19 was also criticised by Ministers because it prohibited any conduct, within certain limits, which might reduce the diversity of the national newspaper press. It was thought that the clause would throw the baby out with the bath water, because it applied, or could be seen to apply, to any conduct, legitimate or illegitimate, that might reduce the diversity of the national newspaper press; it could even condemn good journalism. However, in new clause 1, anti-competitive practices are defined in the same way as in section 2 of the Competition Act 1980, which I believes overcomes the problem.

Let me now turn to advertising revenues of newspapers. Much has been of the costs of producing The Times, and the accounting procedures of News International. In our

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debate on the old clause 19, we focused on its reference to "selling prices", which was thought to imply that a low cover price could be an abuse regardless of advertising revenues. Obviously, that argument on its own is unsustainable, because no one would be able to support a principle that prohibited the publication of free sheets. Therefore, the issue is not selling price, but overall costs.

The new clause meets that criticism by eliminating all reference to selling price; instead, it deals only with anti-competitive practices that threaten to reduce the diversity of the national newspaper press. It would be for the competition authorities--the Director General of Fair Trading and the new Competition Commission--to identify such anti-competitive practices, according to their practised judgment. If accepted, the new clause would leave them entirely free to consider advertising revenues in whatever way they thought right.

Ministers should recognise and acknowledge that all their objections have been heard, heeded and fully catered for in new clause 1. The new clause now applies only where there is a monopoly situation, and only to actions that constitute an anti-competitive practice. It prohibits such practices when they may reduce the diversity of the national newspaper press. Surely nobody could doubt the justification for that.

Mr. Chris Mullin (Sunderland, South): I rise to speak to amendment No. 8, which stands in my name and those of several colleagues, including the hon. Member for Eastleigh (Mr. Chidgey).

Let me say out the outset that I welcome the Bill. It contains many desirable measures and I shall have no difficulty voting for it on Third Reading. However, the acid test is the one that I mentioned on Second Reading, during an intervention on the Secretary of State: whether the Bill deals with predatory pricing in the national newspaper market, which is the worst example of predatory pricing and abuse of the market and is all the more serious because, unlike predatory pricing in other sectors, it has implications for the democratic process. The Bill as drafted does not pass that test; therefore, the purpose of my amendment is to bring predatory pricing in the newspaper industry within its scope.

The issue is one in which my hon. Friend the Member for North Durham (Mr. Radice) and I have taken a serious interest. It will be evident from the signatures of seven Select Committee Chairmen to amendment No. 8 and that of the distinguished Chairman of the Liaison Committee to amendment No. 1 that our concern is widely shared. We have not tabled the amendments lightly. We have talked to the Secretary of State, who has listened courteously to our concerns, to Lord Borrie and to representatives of the industry--including the editor of The Times and the chairman of News International--and we have taken advice from experts.

I had an open mind on Second Reading, after the effect of clause 60 was belatedly explained to us, but I have been impressed by two things: first, that Lord Borrie, a former Director General of Fair Trading, is of the opinion that the Bill as drafted will not catch what is going on in the newspaper industry and, secondly, the opinion of Richard Fowler QC, who shares that view. They are both of the view that the Bill will be ineffective against the five-year war of attrition conducted by News International against its rivals, which is the fundamental reason why I tabled the amendment.

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The background to the problem has been outlined by my hon. Friend the Member for North Durham. For the past five years, News International has been selling The Times and occasionally The Sun for far less than the cost of production. That is not a temporary promotional activity; it has been going on for five years. It isdragging down other newspapers: for example, The Daily Telegraph and the Daily Mirror have felt obliged to respond in order to compete. It is having an extremely damaging effect on our national newspaper market, especially the broadsheet market.

Be under no illusions, The Times is making huge losses. When the chairman of News International came to see my hon. Friend the Member for North Durham and me, we asked him how much it had cost the company so far. Although he was the chairman, he did not appear to know the exact figure, but "under £75 million" was the figure he mentioned. It is unclear whether that comes from the profits of The Sunday Times or from other parts of the empire. Subsequent to our meeting, I wrote to the chairman asking whether the profits of The Sunday Times over the same period exceed the subsidy to The Times and, if so, by how much. Mr. Hinton replied:

so there is no way of telling.

News International argues that the increase in advertising revenue resulting from the increase in sales of The Times should be taken into account, and I agree--that is a perfectly reasonable point--but I am assuming that the £75 million loss Mr. Hinton talked about already takes account of that. The figure is in addition to any increase in advertising revenue. Let us not be distracted: it is clear that News International's war of attrition could be sustained only by a corporation with huge resources.

Those are the facts so far as we are able to discover them. The result is that hundreds of millions of pounds, much of which might otherwise have been invested, has been drained out of the national newspaper industry. The Independent, which I accept has other problems, has been forced to the brink of extinction. It is bogus to describe what has been going on as normal promotional activity--it is not normal; no other national newspaper engages in such sustained price cutting. If the purpose was to make The Times the market leader, the strategy has not succeeded; nor has it succeeded, after five years, in making the newspaper profitable, even when advertising revenue is taken into account. However, it is no defence to say that the strategy has not worked. As to whether the strategy has worked and what was the goal of the strategy, the jury is still out. It could go on for years with consequences on which we can only speculate. Who knows where it will end?

There is another possibility--a different interpretation from the one that News International would like us to believe is the purpose of its activity--and that is to inflict damage on or to sink rivals. Mr. Murdoch has said in public that by the early part of the next century there will be only three national daily newspapers left--The Times, The Sun and the Daily Mail. He did not say whether that was a desirable target or an inevitable and regrettable fact of life. Whatever view one takes, were it to come to pass--I hope that it will not--it would mean that the British public would be left with a choice of lie machines, either the Harmsworth or the Murdoch lie machine. I do not want that day to arrive.

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Happily, there is no shortage of ex-Murdoch executives. A fax may arrive from Los Angeles or New York and they are here today and gone tomorrow. Who knows, that fate may yet overtake one or two of those who are giving us the lavish assurances about how this is just a normal promotional activity. If that fate does overtake them, perhaps they will be in a position to be more frank with us about what it is all about.

As I have said, even now there is no shortage of ex-Murdoch executives. One such person told me that he was in the presence of the man and heard him ask, "How do we sink The Daily Star?" As he said, Murdoch does not need to do that. It is almost an irrelevance to his interests, but he cannot resist the challenge. That is a little glimpse of his mind set.

Another former senior executive of News International has been overheard talking in similar terms about how to sink The Mirror. The strategy has certainly inflicted some damage on that paper over the years.

I do not want to get bogged down by arguing about the purpose of all this. If it is any help, for the purposes of argument, I am willing to assume that Mr. Murdoch's motives are purely honourable and commercial. I want to concentrate on the effect. It is deeply damaging to our democracy to limit or threaten to limit the diversity of our national press.

So far there have been three investigations by the Office of Fair Trading and a fourth is under way. As my hon. Friend the Member for North Durham said, since it is taking place under the existing competition regime, we should not have any high hopes of it. That is the background.

As my hon. Friend ably explained, amendment No. 1 makes explicit what is at present implicit. It is welcome, but, in my view, it is not sufficient to solve the problem. As the Bill stands, it is necessary to demonstrate that there is an abuse and that the abuser has a dominant position in the market. New clause 1, tabled by the Liberal Democrats, attempts to address both those points by lowering the test for national newspapers. I believe that it is not difficult to prove an abuse. After five years, it is surely no longer possible to argue that News International is engaged in a temporary promotional activity. I have concentrated on lowering the test of dominance in relation to national newspapers. That is the purpose of amendment No. 8.

European law is based on cases where a company such as Tetra Pak, having 80 or 90 per cent. of the market, seeks by means of artificially low pricing to squeeze rivals out of the remaining 10 or 20 per cent. It is true that the Commission has indicated that it might be willing to look at cases where the alleged abuser has a much lower percentage of the market, but, in those circumstances, market dominance is a hurdle which will prove difficult to cross in the national newspaper industry.

Depending on which definition one takes, News International has somewhere between 28 and 33 per cent. of the market. I was interested to hear the chairman of News International say on the "Today" programme that News International has only 19 per cent. of the market. That is evidence of how much reliance we can place on News International figures because, as I have said, the true figure is somewhere between 28 and 33 per cent.

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Lord Borrie and Mr. Fowler, an expert on competition law, take the view that market dominance is a hurdle which will prove difficult to cross in the national newspaper industry. In an opinion commissioned by The Independent, Mr. Fowler says:

So, we could sit back and say that nothing can be done about predatory pricing until one of the abusers--it is likely to be Murdoch--has, by fair means or foul, obtained a 50, 60 or 70 per cent. share of our national newspaper market.

What Government would dare to take on a corporation with that percentage of the market? Heaven knows, it is difficult enough to get anyone in high places to think sensibly about Murdoch when he has only one third of the market. Instead of waiting for a bad situation to get worse, I am seeking to rectify the matter now. My amendment does that by lowering the test for national newspapers from dominance to

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