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Lord Colwyn: My Lords, I am delighted to be able to add my name to the list of supporters of the amendment. Like the noble Lord, Lord Harris, I have been inundated with briefs on the subject. However, I rejected them and turned to the Conservative Research Department brief which I found extremely interesting. Addressing the issue of media ownership, it summarises the changes by saying that,

It then covers other points such as the removal of the two-ITV-licence limit and the restrictions on local newspapers with over 50 per cent. of circulation having local television and radio holdings. It concludes that the ITC and the Radio Authority will continue to regulate

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television and radio and that existing competition legislation will apply to mergers involving broadcasters. It ends up highlighting the new public interest test,

    "by which the regulatory authorities can assess and approve mergers or acquisitions between newspapers and television and radio companies. The public interest test will be based on whether the proposed merger poses a threat to diversity and on certain economic criteria".
That all seems very reasonable but, as I said in Committee, it does not mention that the public interest test does not actually apply to everybody. Noble Lords will be aware that some newspapers, by virtue of the fact that they are bought by more readers than others, will not have the privilege of being assessed in the light of the particular circumstances of their case. For the largest newspapers, there is an automatic and insurmountable prohibition on their serious involvement in mainstream television.

My research department brief sounds so obviously reasonable but beyond it there is that great anomaly. Could it be because those prohibitions were included as an afterthought? They certainly do not make sense when considered with the logical and eminently fair system of public interest tests. Getting rid of the 20 per cent. rule is not the same as saying that large newspaper groups will enter ITV. It is merely saying that if the newspaper group is to be refused entrance it should at least have its case properly looked at and the reasons given.

It is not possible to imagine the reasons which might be given--no doubt justifiably. Perhaps permission will be refused because of the newspaper's high market share; perhaps because it has more than, for example, 20 per cent. But at least the ITC will have looked at the issues, weighed them up, and come to the conclusion that the 20 per cent. level is the right one at that time. It may prefer 25 per cent. or 15 per cent. That is fine, but it should say so and rule the merger against the public interest. At least it should do the company the basic decency of listening to its arguments, giving them some genuine thought and giving reasons. That is natural justice at its most rudimentary and removes the capricious nature which otherwise characterises a single and apparently arbitrary percentage figure. Everyone will accept a well reasoned refusal. That is what this amendment is saying. I support it.

The Earl of Stockton: My Lords, the Government's assertion that those who sell more newspapers are less to be trusted seems rather dangerous. I can think of some very limited circulation broadsheets which I would regard as having a totally corrupt influence on the public consciousness. Noble Lords opposite might not agree with my particular choice. However, the concentration on numerical values rather than, as the noble Lord, Lord Thomson, said, having a genuine public interest test will lead the Government into some very strange waters.

Lord Inglewood: My Lords, in responding to the amendment, it may be helpful to go over the background before addressing the particular points raised by the amendment. In liberalising the restrictions on cross-media ownership we decided that there was a need for a public interest test to meet concerns about alliances

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involving newspapers and broadcasters. Uniting the leading sources of news with the most potent sources for influencing opinion through broadcasting carries the risk of concentrating too much influence in the hands of one organisation and, in our view, is therefore against the public interest. That is why we have set clear thresholds, which we ask Parliament to endorse, to prevent the most dominant newspaper groups from also becoming dominant broadcasters. I sense from the debate this evening that your Lordships do not take fundamental exception to that underlying principle. However, we recognise that there may be circumstances in which a merger between a newspaper group and a broadcaster could still represent a threat to plurality, even though it would otherwise be permissible under the thresholds.

The threshold indicates a level beyond which a newspaper's dominance makes it clearly undesirable for it also to have a leading position as a broadcaster. But there may be cases where a newspaper below the threshold proposes a particular acquisition which might be thought to imply excessive concentration. Hence the public interest test which acts as a kind of safety net, especially given that the current rules simply keep national newspapers out of terrestrial broadcasting (and local ones out of broadcasting in their area).

Plurality of ownership is the key to the test which we propose. However, in developing the public interest test, we realised that, while common ownership of a broadcaster and newspaper might threaten plurality, there may be other over-riding economic reasons for allowing the merger to proceed. For example, a radio station or a newspaper may not be economic as a going concern but may be able to survive if a merger is allowed to take place. In such an instance, the relevant regulator could conclude that the merger did not operate against the public interest, notwithstanding that it would threaten plurality of media ownership in the local market.

In practice we expect the regulators to presume that a merger between a broadcaster and a newspaper group, which is allowable under the thresholds, should proceed unless there is a clear threat to plurality. We think that the regulators will soon be able to determine whether there is such a threat which is worthy of further investigation by reference to the coverage areas and circulation areas of the services concerned. If they conclude that the matter warrants further investigation, they may call for such information as they think fit in order to make a decision. Where the ITC or the Radio Authority conclude that plurality is threatened, they may then extend their inquiries to consider economic matters and, where appropriate, seek the advice of the Office of Fair Trading. Inquiries under the public interest test will not normally need to be lengthy and elaborate. However, that does not mean that the findings will be less thoroughgoing than those of a more formal inquiry, as both the regulators are respected for their knowledge and understanding of the media industry. The regulator will inform the parties of its reasons for concluding that a merger would be against, or could be expected to operate against, the public interest. As with other

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decisions made by the ITC and the Radio Authority, such conclusions can be challenged in the courts by way of judicial review.

The amendments of the noble Lord, Lord Thomson, would introduce a much more formal procedure for applying the public interest test, based on the procedures operated by the Monopolies and Mergers Commission under the Fair Trading Act. The regulator, having made a finding on the public interest, would then be required to deliver a report to the Secretary of State to be published in such manner as she thinks fit. We see no reason to give the regulators the power to require the attendance of witnesses, take evidence on oath and order the production of documents on pain of a fine if the orders are not complied with and to require them to produce a report of their findings for publication. The Government's view is that such a quasi-judicial procedure is not appropriate, and, if adopted, would fundamentally alter the relationships between the Radio Authority, the ITC and the media industry.

The amendments would also extend the public interest test to participation in a broadcaster by a newspaper group by way of minor shareholding. In my view it would be wrong to include participation, as opposed to control, within the scope of the test. That would place more of a burden on the industry and the regulators. We intend to bring forward regulations to limit the ability of newspapers and broadcasters to exert a material influence over each other through the shareholdings in due course. That will be done through a replacement for the Broadcasting (Restrictions on the Holding of Licences) Order 1991. So there will be clear limits to minority shareholdings by interested players. We are also of course proposing a wide, de facto test of whether a particular body is exercising control of a licence holder. Given that, inquiry into the public interest in a shareholding seems to us unnecessary and bureaucratic.

The amendments of the noble Lord, Lord Thomson, would also change the wording of paragraph 11 of Part IV which sets out the matters which the regulators should take into account when applying the public interest test. I am concerned that the noble Lord's wording does not include a reference to "plurality". In our view, plurality of ownership is desirable as well as diversity of information sources.

It is perfectly true that a single owner may promote a variety of information sources, but that is not necessarily healthy in securing a range of different views. I am also concerned that the wording that the noble Lord proposes for paragraph 11(1)(b) is not as precise as the present draft which makes it clear that, in considering the economic benefits, the regulator must have regard to the holding of a licence by a newspaper proprietor as regards the holding of that licence by any other body. The wording used in paragraph 11 has been carefully drafted to keep the scope of the matters which the regulators should take into account as narrow and specific as possible.

What I have endeavoured to do in my remarks--I apologise to your Lordships for taking a little time about it--is to explain how we envisage the system will work

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and to set that against the consequences of the test of the noble Lord, Lord Thomson. I dare say the noble Lord will say that he prefers his way of dealing with these matters, but I wanted to make it clear to your Lordships exactly why we have adopted the position we have.

11.15 p.m.

Lord Thomson of Monifieth: My Lords, I am grateful to the Minister for dealing with my amendment at this hour of the night as carefully and as conscientiously as he has. I have listened to his words carefully and will read them even more carefully tomorrow. I am bound to say that if I had thought that including the word "plurality" in one of my amendments would have been acceptable to the noble Lord I would certainly have included it, but, even had I done that, I doubt whether the main thrust of what I seek to do is likely to be acceptable to the Government in their present mood. I still think, in relation to these two newspaper groups, that the present way of dealing with the question of where the public interest lies is a peculiarly arbitrary one. I listened carefully to what the noble Lord said. In the light of that, I beg leave to withdraw the amendment.

Amendment, by leave, withdrawn.

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