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Lord Simon of Highbury: My Lords, I have to agree with the noble Lord, Lord Kingsland: this is an amendment in relation to which there is profound disagreement between us on the underlying principle. The first amendment seeks to replace the prohibition in the Bill which is modeled on Article 86 of the Treaty, with a very different prohibition.
The first thing to note about this new prohibition, as the noble Lord correctly pointed out, is that it is limited to conduct carried out with the intention of committing an abuse. While I can see, as my noble friend Lord Desai pointed out, that this idea is superficially attractive, it has two serious defects. The intention of the Bill is to prohibit conduct that has anti-competitive effects. An abuse may be the effect of conduct on the part of a dominant company without being the intended result. Even more seriously perhaps, this amendment would require the director to demonstrate intent every time before an abuse could be stopped.
I have to say that that seriously risks driving a coach and horses through the prohibition. My noble friend Lord Desai would like to find a way of easily proving intent. All I can say is that it is one thing to show the result of conduct on competitors; it is quite another to establish the intention on the part of an undertaking in pursuing that conduct. The first thing that any would-be abuser would do would be to make sure that there was absolutely nothing incriminating as to its intention. Nothing would be committed to paper. Without written evidence, such as meeting notes, or perhaps incriminating statements in strategic terms, intent is extremely difficult, if not impossible, to demonstrate. The undertaking concerned will claim that there were other reasons for the conduct complained of. The director could then find himself unable to act through the conduct observed. It could have a very serious impact on all competitors. One could be aware of that, but nobody would be able to move because there would be no proof of intent. The prohibition, as we understand it, would be toothless.
But there are several other difficulties with the new prohibition. If the Bill were to be changed as proposed, the governing principles clause could not apply to the new prohibition. The alignment with Article 86 would be lost. So what would be the effect of the new prohibition?
If we ditch the EC treaty model in the way proposed, there will be two effects. First, very many of our businesses would have to deal with two different prohibitions of abuse, one at domestic and one at EC level. We think that that would be more burdensome. Secondly, the application of the new prohibition will be entirely uncertain too. No one will be able to look to EC case law as a guide to the application of the domestic prohibition. That would basically be more confusing for the business community.
I used the expression "a coach and horses". It is extremely difficult to conceive how we could accept the amendment, because even if we do not accept the "coach and horses", what is meant by "substantially" in this context? If the threshold lets off lots of abuses, would that be a good thing? Surely an abuse is an abuse, even if it is only small players who are harmed. It is a serious hurdle under EC principles to show that conduct is an abuse. Once that hurdle is crossed and an abuse of dominance has
been demonstrated, our belief is that it should be stopped. I hope that the noble Lord will acknowledge those points and see fit to withdraw the amendment.
Lord Kingsland: My Lords, I have noted the Minister's complete intransigence on the point and in those circumstances I am a realist. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Kingsland moved Amendment No. 22:
The noble Lord said: My Lords, very telegraphically, this amendment arises out of the consequences of a decision by the European Court of Justice called Tetra Pak II. The decision involved the manufacture of UHT milk cartons. In those circumstances, the company was held to have a dominant position. It also supplied a related market for packaging in non-UHT milk, ordinary pasteurised milk. Although it was held not to have a dominant position in that market, nevertheless the disciplines of the European Community were imposed on it, as if it had a dominant position. That, in my submission, seems a highly unsatisfactory decision and one that in all the circumstances ought not to be followed in the United Kingdom. That is the background of the amendment. I beg to move.
Lord Simon of Highbury: My Lords, it is correct that EC case law shows that in certain circumstances Article 86 may apply where an undertaking is dominant in one market and commits an abuse in a different, neighbouring market. The relevant jurisprudence will be imported into the interpretation of Clause 18 via the governing principles clause.
The noble Lord says that he does not like this particular piece of jurisprudence. I do not think it would be sensible to pick and choose which individual EC cases we wish the director and the courts to look to. The noble Lord referred to Tetra Pak. We are aligning ourselves with the EC system, for all the reasons that we have debated at length before. I am sure we shall continue to debate them. In the case to which the noble Lord referred, the court found that in all the circumstances, an undertaking's dominance in one market enabled it to commit predatory behaviour in another neighbouring market. It is not for me to comment on the wisdom of the court's judgment. But I am clear that there is no justification here for rewriting our prohibition and departing from the Article 86 model as a consequence.
Under those circumstances, I hope that the noble Lord will acknowledge the point and withdraw the amendment.
Lord Kingsland: My Lords, I wish to thank the Minister for his reply, which was all that I expected. I give him notice now that when it comes to Amendment No. 58 I shall hold him to everything he said about conforming with EC law. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord McNally moved Amendment No. 24:
Page 10, line 26, at end insert--
("( ) Conduct described in this section shall not constitute such an abuse unless--
(a) dominance is used to facilitate the abuse; and
(b) dominance in one market--
(i) is the cause of the abuse in that market, or
(ii) is the cause of the abuse in another market and, as a result of that abuse, that dominance is strengthened.").
After Clause 18, insert the following new clause--
(".--(1) Any conduct on the part of one or more national newspaper undertakings which amounts to an abuse of a dominant position is prohibited if it may reduce the diversity of the national newspaper press in the United Kingdom by reducing, retarding, injuring or eliminating competition.
(2) Conduct may, in particular, constitute such an abuse if it consists in--
(a) any of the forms of conduct specified in section 18(2);
(b) other action which may reduce the diversity and independence of the national newspaper press;
(c) imposing selling prices below marginal cost of production on a persistent basis.
(3) In this section "dominant position" means holding a substantial degree of market power in the national newspaper market in the United Kingdom.
(4) The prohibition imposed by subsection (1) is referred to in this Act as "the press diversity prohibition".").
The noble Lord said: My Lords, a great deal of press comment has been made in recent days about the observations of the noble and learned Lord on the Woolsack, Lord Irvine, about the possible need to restrict the right of press reporting in certain areas. Freedom of the press is important; indeed, it is an essential ingredient of a free society. But if freedom of the press can be imperilled by restrictive laws, it can also be threatened by restrictive ownership.
This amendment has one intention and one only: to promote the framework of fair and transparent competition in our newspaper industry, with the intention of sustaining diversity, quality and choice. It does make a distinction between newspapers and other goods and services because we believe that newspapers are different from tins of beans. They are not only a product, they are, as I have said, an essential ingredient for a functioning democracy.
My amendment is signed by noble Lords from all parts of the House. It is, I understand, going to be resisted by the Government. I find that a curious position for the Government to take. The amendment is in no way a wrecking amendment. It is designed to clarify and strengthen competition in an important sector. Although it is not a full harmonisation with EU law, neither are other parts of the Bill. In addition, other EU countries have non-harmonised laws to protect the diversity of their press. Most curiously of all, the amendment is full square with the position taken by the Labour Party when in Opposition.
Three-and-a-half years ago, on 20th July 1994, in another place, Mr. Robin Cook--then spokesman on competition policy--said at col. 445 of the Official Report:
He also said at col. 444, referring to Mr. Rupert Murdoch:
Those words were true three-and-a-half years ago, they are even more valid today.
But let me make it clear that the amendment is not aimed at any single individual or any particular newspaper group. Some of my best friends write for The Times. If, as last Saturday, they publish 15 year-old photographs of me, I shall still continue to read it! The amendment seeks to create competition, which would be followed as much by David Montgomery, Tony O'Reilly or Conrad Black as Rupert Murdoch. Perhaps, as importantly, it will provide the fairness in competition which would make it possible for newcomers to enter the market. One of the great things about the 1980s was that the work--some of it done by Mr. Rupert Murdoch--that removed restrictive practices from the newspaper industry, that brought in new technologies, allowed newcomers to enter the newspaper industry. We saw both the Independent and Today launched during that time. But in recent years, because of predatory pricing, we have seen competition replaced by anarchy, where our national newspapers are invited to compete only to see who bleeds to death first.
I say that this amendment is aimed at no specific company; but it would encourage a thorough investigation of the policy and strategy of News International. What is Mr. Murdoch up to with his price-cutting policy which has cost him tens of millions of pounds over the past four years? Nye Bevan asked us, "Why look in the crystal ball when you can read the book?" We know from the initial competition between British Satellite Broadcasting and Sky that Mr. Murdoch is not afraid to sustain large losses over a long period in order to see who blinks first.
The pricing policy of The Times does not make sense unless it is to clear the field of two major competitors--the Independent and the Telegraph; indeed, the Independent may be the only accidental casualty in the cross-fire between The Times and the main target, the Telegraph. In crude business terms, a broadsheet field cleared of major rivals with the prospect of perhaps a 2-million circulation would be extremely good business for The Times and its owner. But what is good business for Mr. Murdoch is not necessarily good sense for a healthy democracy or for a diverse and vigorous press.
It is difficult to anticipate ministerial replies tonight. There have been several over recent days. We have been told that this is merely a "belt and braces" amendment. If that is so, why do not Ministers indulge us? Surely a belt and braces amendment is better than ministerial
I want to make it clear tonight that I intend to press this issue to a Division. I know that taking on a government against a three-line Whip is no easy task, so I make two appeals. The first is to Ministers to think again before they tarnish rather than strengthen the Bill. The second is to the House at large. We are increasingly asking ourselves, "Why are we here?" I submit that there is no greater justification for an advisory and revising second Chamber than to champion the cause of a free and diverse press.
When Robin Cook tried three-and-a-half years ago to act in exactly the way that I am trying to act tonight, the then Director General of Fair Trading, Mr. Carlsberg, rebuffed him with these words,
Quite so. This amendment draws that line more clearly and distinctly than does the general Bill. It gives powers that are special because the diversity of press ownership is special. Accepting this amendment will make it a better Bill and a stronger Bill. If the amendment is carried, instead of losing titles, we will be opening the door to newcomers; instead of consolidation of power, which is already reaching dangerous and unacceptable proportions, we shall be encouraging pluralism and choice. I commend the amendment to the House. I beg to move.
"there are two requirements from our media if we are to have a healthy democracy. First, we should have a variety of newspapers and, secondly, those papers should contain a diversity of views".
"A ... proprietor who insists that his editors preach competition is currently practising unfair competition. A proprietor who, through his newspapers, preaches the supreme virtue ... of consumer choice is now acting in a way that is calculated to restrict consumer choice in the newspaper industry".
"At times there is a fine line between aggressive price competition and predatory pricing".
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