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Baroness Buscombe: I rise briefly to say that I fully support my noble friend's amendments, which would tighten the definition of newspapers so that smaller newspapers are not caught by the special public interest regime. They would also reduce the scope of the Secretary of State's discretion to intervene in cases in which editorial plurality problems are not raised without removing altogether the possibility of intervention. It would be otiose of me even to begin to repeat the words of my noble friends Lord Wakeham and Lord Fowler, who have considerable experience in this area. I hope that the Minister will look favourably on the amendments.
I defer to the vast knowledge of the noble Lords, Lord Wakeham and Lord Fowler, in terms of the newspaper industry but I will not defer to them in signifying my interest in and commitment to the local press; none of us could have served in another place without having a particular relationship with our local newspapers. We know that many criticisms voiced about the national press are singularly inappropriate in relation to local newspapers; they conduct themselves with a degree of partiality and effectiveness, which their bigger brothers and sisters often should take note of in relation to national journalism. We are aware of the reasons for the differences between them.
Amendment No. 310B amends Clause 269, as the noble Lord, Lord Wakeham, said, by deleting references to local newspapers that are published on other than a daily or Sunday basis. Although we believe that our definition could be more elegant, it was drafted in this way to ensure that only local periodicals were subject to the special newspaper merger regime, and not national periodicals, such as the Economist.
Local periodical titles were included in the definition of a newspaper at the insistence of Parliament during the passage of the Monopolies and Mergers Act 1965, which was the precursor to the Fair Trading Act 1973. That was in recognition of the importance of local newspaper titles and of the fact that the vast majority of such local titles are weekly.
I consider it appropriate that local newspapers should be included in the special newspaper merger regime. I listened carefully to the arguments advanced by the noble Lord. There have been cases under the Fair Trading Act regime where transfers involving local weekly papers have given rise to an adverse public interest finding and it is important that the Secretary of State should continue to be able to address those cases in which public interest issues are raised.
Although previous cases involving local weekly titles have also involved a local daily, it is entirely possible that public interest concerns could arise in a case involving only local weekly titles and the regime should surely have sufficient flexibility to permit scrutiny of such cases where relevant.
Noble Lords will be aware of examples of previous cases involving local weekly titles; they include the DMGT/T Bailey Forman transaction, which the Competition Commission found gave rise to plurality concerns in the East Midlands, and David Sullivan's proposed acquisition of the Bristol Evening Post plc, where the proposed acquisition of a number of weekly titles was blocked on plurality grounds. Issues arise infrequently. We are dealing with powers that would be triggered only on rare occasions but they should, however, be available.
The jurisdictional tests proposed for newspaper mergers are the same as those for the standard Enterprise Act merger regime. The only exception to that is that where there is an existing 25 per cent share of supply of newspapers in at least a substantial part of the UK, plurality issues may be taken into account although there is no increase in the share of supply. I hope that the noble Lord recognises the importance of that. That ability to intervene in newspaper mergers where there is no direct overlap has been introduced because consolidation may not be directly relevant to plurality assessments.
Also, under the proposals set out in the Bill, the very smallest newspapers will be taken out of the regime altogether. The noble Lord, Lord Fowler, emphasised that point. The enterprise acquired needs to have a turnover in the UK in excess of £70 million or it must have a 25 per cent supply threshold. So we have a framework which takes out some of the smaller positions.
However, the share of supply test ensures that having established that a given title is essentially a UK publication, it is only where the newspaper merger involves a share of supply of at least 25 per cent in a substantial part of the UK that the newspaper public interest regime may apply.
Amendments Nos. 310D and 310E are intended to restrict the scope of the special public interest regime for newspaper mergers in such a way that the 25 per cent share of supply must apply to the acquiring company and must be satisfied in the same area as that in which the daily newspapers, if any, of the target circulate.
These amendments would undermine the purpose behind the special public interest regime. This aspect of the regime is intended to enable scrutiny of acquisitions of newspaper titles where there is no overlap in share of supply in the UK or a substantial part of the UK, but where at least one of the parties has a significant presence in at least a substantial part of the United Kingdom.
The amendments would mean that a number of types of acquisition would not be caught by the special public interest regime, even if the track record of the acquirer suggested that the acquisition would be likely to have an adverse effect on accurate presentation of news, freedom of expression of opinion, or plurality of views in newspapers in the UK.
In effect, the amendments would prevent scrutiny under the special public interest regime of acquisitions concerning only local weekly newspapers, acquisitions of a local monopoly, involving daily and weekly titles, if the acquirer does not itself have a 25 per cent share of supply in the same area, and acquisitions of newspapers with a significant share of supply in at least a substantial part of the UK by an overseas purchaser.
I believe that it is important that the Secretary of State should be able to intervene in acquisitions such as these, if it appears that, having regard to the newspaper public interest considerations, such an acquisition may operate against the public interest.
As I have already indicated, we consider that local weekly newspapers play an important part in the communities they serve. To exclude such titles from the ambit of the special public interest regime surely would undermine that role. I stress that the Government are committed to sustaining the role emphasised in terms of the beneficial effect by noble Lords who have contributed to the debate.
I turn finally to Amendment No. 310F. It seeks to prevent the OFT using newspaper advertising or newspaper advertising revenue when assessing whether or not the share of supply test is satisfied for the purposes of the special public interest regime. The Bill as originally drafted expressly specified that newspaper advertising could be used as a basis for establishing whether the share of supply test was satisfied.
The Opposition in another place tabled amendments to remove express references to newspaper advertising. The amendments caused the Government to reflect further with the OFT as to how it might operate the share of supply tests in the extended jurisdiction regime.
Following discussions with the OFT, we are satisfied that it is not necessary to include an express reference to newspaper advertising in the provisions dealing with the special newspaper public interest regime. Accordingly, in order to avoid any confusion that might be caused by having express reference to newspaper advertising in the special newspaper public interest regime, amendments were tabled by the Government at Report in another place to delete this superfluous wording. Unfortunately, it did not have time to consider these beneficial government changes and as a result we are picking up the consequences, as is so often the case. We consider that it would be inappropriate to require the OFT to use two different methodologies to assess whether or not the share of supply test is satisfied depending on whether the merger falls within the standard merger regime or the special public interest regime. Moreover, that would be contrary to the aim of streamlining procedures between the standard merger regime and the public interest regime, as far as it is possible to do so.
We consider that share of the supply of newspaper advertising or newspaper advertising revenue may be an appropriate measure of economic strength in relation to free newspapers where circulation and distribution figures may not be available or may not be a true indication of the economic strength of the titles in question. We also consider it important that the OFT should be free to use the measure of share of supply that it considers appropriate having regard to the relevant circumstances and regardless of whether the acquisition leads to an overlap in share of supply.
I have dealt at somewhat greater length with the amendments out of deference to the fact that the noble Lord moving them had truncated his remarks and gone to the heart of the issue. I also believed that it was obligatory for me to present the Government's defence of the present situation as fully as I was able to do, within the time constraints under which we are all operating. On the basis of the reply I hope that the noble Lord will be able to withdraw his amendment.
Lord Wakeham: I am grateful to the Minister for his response. As regards Amendment No. 310F I am happy with his reply, but I am not quite so happy as regards others. because it is overkill, too bureaucratic