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8.15 pm

The Government have two principal objections to my proposal. First, they say that they are not in the business of singling out Rupert Murdoch or any other proprietor. My amendment does not do that. It seeks to outlaw predatory pricing among national newspapers regardless of the identity of the proprietor. As we have seen, The Daily Telegraph and The Mirror would also be affected. Any newspaper corporation that attempts to subvert the market by predatory pricing would be caught by my amendment. Mr. Murdoch's name crops up more than most because he is the greatest living practitioner of predatory pricing. I am sorry about that, but it is an unavoidable fact of life. My amendment makes no mention of Mr. Murdoch or News International. It would apply across the market.

Secondly, the Government object to singling out national newspapers. That is the key issue--it is the core difference between us. It is a difference of principle and we should not shy away from it. I am grateful to Ministers for not arguing that my amendment is technically defective--it is not. We are discussing a straight issue of principle and my argument is simple.

The free flow of information is the life blood of democracy. A diverse media is a precondition of democracy. Any practice that, by accident or design, is likely seriously to limit newspaper diversity therefore threatens democracy. That is why newspapers are a special case. As the hon. Member for Eastleigh said, previous Governments have accepted that in relation to merger policy and other aspects of competition law. Clauses 57 to 62 of the Fair Trading Act 1973 are devoted to establishing stricter criteria for newspaper mergers. That Act was passed by a Conservative Government.

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It is disappointing to see so few Conservative Members today. I saw a poll which suggested that 95 per cent. of Conservative Members thought that the Government were too close to Murdoch. If they really thought that and were concerned about it--

Mr. Radice: They want to be close to Murdoch.

Mr. Mullin: My hon. Friend is right; it is jealousy. I had hoped that one or two Conservative Members would come to the House to express their concern on this issue. Alas, that is not the case.

In case anybody thinks that the Government have changed their mind, I can say that that is not so. In the consultation document that preceded the Bill, the President of the Board of Trade said:


Those are the words of the President of the Board of Trade within the past 12 months. In other words, when it suits them, the Government accept that newspapers are a special case.

I could not put it better myself. However hard I try, I am unable to distinguish between a threat to newspaper diversity caused when a large corporation seeks to take over its rivals and a threat to diversity caused by a corporation that already has an enormous share of the market seeking to expand its share by a practice so blatantly unfair as predatory pricing. In any case, it is not strictly true that the Bill applies across the market. As the hon. Member for Eastleigh pointed out, schedules 2, 3 and 4--no doubt for good reasons, which I do not dispute--list all sorts of areas to which the new competition regime will not apply. It would be a simple matter to make an exception for newspapers. The Fair Trading Act is a healthy precedent. All that is required is the political will, which is the purpose of my amendment. In the absence of a miracle, I intend later to put the amendment to the vote.

Mr. Marshall-Andrews: I support the amendment, which is not specifically anti-Murdoch or anti-News International. I declare an interest: I write reasonably regularly for The Sunday Times, which is, of course, part of News International. In the past few weeks, I have written about the potential catastrophic effects of the third way, the vulgarity and vast waste of the millennium dome and the abolition of the Lord Chancellor. I very much hope that I shall in future be given the opportunity to write other articles that are helpful to the Government. I do not attack News International or Rupert Murdoch and I am very happy to write for his newspapers and take his shilling.

The point needs to be made that this is a commercial Bill, the purpose of which is to regulate commercial dealings and promote the purifying oxygen of competition. It is a perfect Bill. It is strong and good in every respect except one: it fails to address the unique commercial position of the newspaper industry, which is worth £700 million a year and, notwithstanding that, succeeds in making an aggregate net loss of £50 million. Why is it unique? That question is essentially the argument that the Government have against the amendment. Why single out the newspaper industry?

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I shall attempt to answer that in one sentence. No other major commercial undertaking is owned for the express and specific purpose of obtaining and using political power and influence. That is the difference between the newspaper industry and any other. Protestations to the contrary are not worth even considering.

The Sun did not run a banner headline, "It Was The Sun Wot Won It" because of mere vulgar braggadocio, but because it believed that it was true. The Prodi incident caused consternation not because it was an unedifying example of politicians operating at the behest of business men, but because the business man was Rupert Murdoch, who is, in effect, a strong and established politician.

What is the effect of that single difference between the newspaper industry and every other? I suggest that it has two effects. First, we have a legitimate interest in debating the industry in the House because it affects politics and democracy. The second effect, which is far more important in the context of the amendment, is that the political power that is wielded within the industry, which it conceals, distorts the commercial strategies of the market. The Bill deals with those commercial strategies and is predicated on commercial reality.

In normal commercial considerations, no commercial entity can or does afford, for a long period, to trade at a loss. It can do so only for a limited period to drive its competitors to the wall. That does not apply in the newspaper industry. The normal capitalist impulse to destroy one's competition is based always on the desire to obtain a monopoly position to manipulate price. That is not the motive in the newspaper industry, where the impulse is to destroy one's competitors to obtain a monopoly of power. That imports into the industry completely different commercial realities. One has only to test that against what has recently happened in the industry to realise that it is true.

Nobody but a commercial lunatic would have purchased The Independent for commercial reasons. It was purchased not because it is a commercial concern but because it is a newspaper and is likely, let us face it, to make a loss for a considerable period. Precisely the same may be said--topically--of the New Statesman. Nobody but a commercial lunatic would have purchased that, but it was purchased by a gentlemen of enormous commercial acuity, not because it would make a profit but because it is a newspaper.

The difference in the commercial considerations imported into the industry by the reason people use, purchase and run newspapers is extremely important for the purposes of clause 18. As we know, one must break two separate rules to transgress clause 18. The first relates to predatory pricing, which is set by Tetra Pak because of the European provisions of clause 60. There is no problem in the House with the conditions that Tetra Pak lays down. If one applies those rules there is a near certainty that Rupert Murdoch has been predatorily pricing with News International and, in particular, with The Times. I cannot tell the House that that is true because I am not privy to the inner workings of News International, but every objective test suggests that Rupert Murdoch has transgressed the Tetra Pak principle. That is not the problem, which is why amendment No. 8, which bears my name, does not even contemplate examining predatory pricing.

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The single issue here is what is domination in the market, and, on that issue, the newspaper industry is different from others. The reason the Bill and European legislation and jurisprudence apply only to dominance in the marketplace is that that is the only place where it matters. No one who is not dominant in the marketplace will predatorily price. If they do, it will not be for long because if they do not hold a dominant position in the marketplace, predatory pricing is commercial suicide. Ultimately, if such a war is started, the person who holds the dominant position will always win on the well-known General Haig principle that there will always be one man left standing at the end. That is why legislation, in commercial terms, applies itself to the dominant position in the marketplace.

That does not apply to newspapers because the reasons for using and owning them mean that those with a substantial share in the marketplace will sustain losses for years, as News International has done, to break their competitors not commercially but politically and to gain a greater political share. The implicit danger is commercial. News International holds 33 per cent. of the market. I have to say to my hon. Friend the Member for North Durham (Mr. Radice) that, under any test, 33 per cent. will not be enough to guarantee that a court or the Office of Fair Trading will find that a company holds a dominant position in the marketplace.

A little law that I know proves that that is the case. The United Brands or Michelin test, which began its life in the ninth or 10th version of the Commission's report on competition, is that dominance exists if the nature and structure of the market enable a company to act independently of competition. I shall not bore hon. Members to tears with the reasons, but my view, which coincides with those of other silks who have been quoted, is that that test will not guarantee a finding of a dominant market position for Murdoch's empire or any other newspaper empire in this country.

If the House is to safeguard the principles that my hon. Friend the Member for Sunderland, South (Mr. Mullin) articulated so well--the democracy of the House and the continuation of a healthy, democratic newspaper industry to support it--the only way for it to do so is for the House, united, one hopes, without party, to vote for the amendment.


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