- (a) national newspapers, or
- (b) national newspapers of any particular description.
§ (2) Any conduct on the part of any person to whom this section applies shall be prohibited if—
- (a) it constitutes an anti-competitive practice; and
- (b) it may reduce the diversity and independence of the national newspaper press in the United Kingdom.
§ (3) For the purposes of this section "an anti-competitive practice" is a course of conduct which has, is intended to have, or is likely to have the effect of restricting, distorting or preventing competition.
§ (4) The prohibition imposed by subsection (2) is referred to in this Act as "the press diversity prohibition".").
§ Lord McNally rose to move, That this House do disagree with the Commons in their Amendment No. 7, but do propose the amendment set out in lieu thereof.
§ The noble Lord said: My Lords, I was much encouraged in an earlier debate to find the House in a frisky mood. I hope that noble Lords on the Government Benches who preach the wisdom of this House by sending messages to another place will hold firm for the next short debate.
§ Noble Lords were informed earlier that the previous Bill had taken rather a long time in its passage through Parliament. The Bill was introduced into this House on 15th October 1997, so it has just had its first birthday. I am not sure that the Whips made that clear when they convinced the Minister that this was a good maiden Bill for him to try to take through Parliament. The most significant event in relation to this Bill occurred on 9th February of this year when noble Lords passed an amendment standing in my name and that of the noble Viscount, Lord Astor, the noble and learned Lord, Lord Ackner, and the noble Lord, Lord Borrie, to insert specific protection for the newspaper industry against unfair competition. That amendment was removed by the Commons in Committee.
§ In considering this amendment today, I ask noble Lords to exercise the real but rarely used power to ask the Commons and the Government to think again. There are those who say that this House has no real influence. I ask noble Lords to cast their minds back to 9th February and their victory that night and see what the consequences have been. On Monday The Times had gone up from 10p to 30p. I wanted something more substantial for my political epitaph than the creation of 300 per cent. inflation. Nevertheless, that is a fact. The Office of Fair Trading has spontaneously mounted an inquiry into the pricing policy of The Times. We eagerly await an inquiry that newspapers tell us is a robust one. Perhaps most exciting of all, we discovered on the night of 9th February that there are almost as many independent directors of The Times in this House as there are Bishops on the Bishops' Bench. We also discovered (to paraphrase Dorothy Parker) that they represent the full gamut of emotions from A to B.
§ I understand that for those Labour rebels who supported the amendment that evening it becomes a little more difficult. When governments reach this stage in a parliamentary year, we know that intellectual argument is abandoned and they simply plead that defeat will disrupt their timetable and put this and other legislation into jeopardy. But I ask noble Lords to remember that this has never been a wrecking amendment; it is an amendment to make a good Bill better.1347
§ What are the differences between me and the Minister? I believe that they can be narrowed down to his belief that a cocktail produced by Clause 60 of the Bill and Articles 85 and 86 of the Treaty of Rome will create in British law a veritable legislative "Viagra", as far as concerns competition law. The Minister believes that, because the Bill incorporates prohibitions based on Articles 85 and 86 of the treaty and brings into domestic competition law, via Clause 60 of the Bill, provisions to be interpreted consistently with the corresponding provisions of Community law, predatory pricing and other abuses will be subject to the tests of predatory pricing laid down by the European Court of Justice. That is why, if the Minister runs true to form, we shall hear a good deal this evening about Tetra Pak. All I can say to the Minister is that Tetra Pak is an excellent packaging but makes a poor fig leaf.
European case law on manufactured goods and industrial products is hard to square with the realities of the newspaper industry. As Mr. Richard Fowler, QC, has said:
In my opinion European case law could not be relied upon".
Yet the Government rest their case on an almost a blind belief in the strength of European case law. I understand that competition lawyers sometimes refer to certain sections of legislation as "Klondike clauses" because of the lucrative litigation to which they give rise. Without the specific prohibitions contained in my amendment, I believe that the Bill will offer a Klondike for lawyers with no guarantee of protection for the quality, diversity and choice of our newspapers. That is why I commend to noble Lords the amendment now before the House. It is less sweeping in its terms than the clause that noble Lords supported in February, which was removed by another place. It confines its prohibitions to anti-competitive practices. Any action that is not an anti-competitive practice would escape prohibition even if it threatened to reduce diversity in the press.
I have never opposed vigorous competition; nor do I want to fossilise the present structure of the newspaper industry. But I want the new Competition Commission to have explicit and freestanding duties to watch anti-competitive conduct that threatens press diversity. This is more likely to happen where its responsibility is specific rather than part of a wider and more general duty. The nub of my case, and the cause of the differences with the Minister, is encapsulated in a single quote from Mr. Ian McCartney, the Minister responsible in another place. When rejecting proposals to lower the threshold of what is "dominant" in the newspaper market he said:
I see no justification for treating newspapers differently".— [Official Report, Commons; 8/7/98; col. 1165.]
My whole case is that newspapers must be treated differently. Why? I give the answer provided by Mr. Robin Cook on 20th July 1994 when he was the Labour Party spokesman on these matters. He called then for specific action against predatory pricing and unfair competition. He said that at that time Labour Party policy was,
informed by a view of a need for a diverse media and of the importance of a diverse media for a healthy democracy".
That is why there is justification for treating newspapers differently. They are important for the preservation of a healthy democracy. That position was adopted by spokesman after spokesman of the Labour Party before the general election.
§ I shall leave it to others to speculate on the reasons for the change of heart. But I say to the Minister, "U-turn if you want to", but on these Benches we remain convinced of the need for special treatment and protection. In this we are consistent, as indeed, I understand, is the Opposition Front Bench. It consistently appeased Mr. Rupert Murdoch when in government, as the diaries of the noble Lord, Lord Wyatt, now reveal, and is set fair to appease him again tonight. And much good may it do them. Let me reassure them that parties, compared with dead parrots, do have an after-life.
§ I make only two other points. One is to the editor and staff of The Times. When Mr. Petter Stoddart, editor of The Times, addressed a meeting in the House before the Summer Recess, he accused me of attacking the integrity of The Times journalists. Nothing could be further from the truth. I repeat my affirmation of last February: some of my best friends write for The Times. Let me go further. If the integrity of The Times journalists were ever to be under threat, I suspect they could rely more on support from these Benches than from some who will pose as their friends today.
§ Finally, I say this to your Lordships. My perseverance on the issue relates to a wider picture. We are told that we are on the threshold of the information age. At the dawn of that age, control of technology and information is concentrating at an alarming rate. During the summer there was a photograph in our national newspapers of a gathering of about two dozen people who between them controlled most of the means of disseminating news and information to our democratic world. That concentration of power, married with the advance in technologies, offers a challenge to democratic governments and free societies which we have scarcely begun to address.
§ Last week we agonised about how rich men could buy themselves influence and access by donating money to political parties. So we stop foreigners giving money to our political parties. But buy yourself a newspaper or a television station and you buy power and influence which makes and unmakes governments; it makes 10 Downing Street an ever-open door and sends Chancellors of the Exchequer scurrying to obscure mid-western locations to pay court.
§ The amendment will not end such power, but it will send a message. The media moguls are not self-regulators. One day we shall have to contain them. I realise that I am asking the House to exercise a rarely used power. But the independence and diversity of our national press is an exceptional cause. Let us draw a line in the sand tonight and ask the Government and another place to think again. I commend the amendment to the House.1349
§ Moved, That this House do disagree with the Commons in their Amendment No. 7 but do propose the amendment set out in lieu thereof—(Lord McNally.)
§ Lord Harris of High Cross
My Lords, I accept the proposition of the noble Lord, Lord McNally, that newspapers are different. Indeed, newspapers are already constrained under the Broadcasting Act and by the merger provisions of the Fair Trading Act. As the Minister will no doubt tell us at greater length, the noble Lord's purpose is to graft on to a general competition Bill a most specific clause discriminating further against newspapers with the unconcealed objective of regulating the commercial policy of one newspaper.
As one of the independent national directors of Times Newspapers in the House, I believe that it may help the subsequent debate to set the context. History tells us that The Times has lost money throughout most of this century, despite successive changes of ownership from Northcliffe to Astor and to Thomson. When the Government accepted News International's last ditch rescue attempt in 1981, Rupert Murdoch followed the agreement with the noble Lord, Lord Thomson, in accepting six independent directors—I am one of them—with the responsibility of ensuring that the proprietor should not have influence over the editor or editorial policy.
Throughout the 1980s, severe losses continued and mounted despite several changes of editor, approved by the independent directors. The circulation of The Times fell to one-third of that of the Daily Telegraph which retained the dominant market position it had in turn acquired in the 1930s through the practice of old-fashioned price competition.
The aim of price cutting was not to destroy the Independent, nor even the Daily Telegraph. It was to escape from chronic loss-making and to endeavour to increase circulation, which is essential if advertising revenues are to be increased. Advertising revenues form the major part of the income of all the broadsheet newspapers. By any standard, that strategy has proved remarkably successful. The circulation has doubled, and advertising revenue roughly likewise. The total market for broadsheet papers has been enlarged; the size of papers has increased; and the average price has reduced.
Other papers naturally did not like price competition. As Corporal Jones used to say of the enemy's response to bayonets, "They don't like it up them". Nevertheless, the Guardian managed to retain its circulation and, with some less publicised price cutting, the Daily Telegraph has also managed to remain within the one million total circulation.
The noble Lord, Lord McNally, referred to Report stage at which he said that he had 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".—[Official Report, 9/2/98; col. 913.]That sounds all very well, but it does not explain, let alone excuse, the noble Lord's vendetta against what was a deeply considered and widely researched policy 1350 by the executive and non-executive directors of Times Newspapers who carry the responsibility for its fortunes.
The noble Lord emphasises his good intentions. That is not enough. We know the road to hell is paved by little else. I wish to put a few fairly simply practical questions which are left unresolved. What constitutes fair and transparent competition? Does open price cutting have any part to play? If so, how much? If not, how could we prevent well established newspapers from colluding to raise their price, as they did comfortably enough in the 1980s? And how could a new entrant break into the market if it cannot deploy deep price cutting without the noble Lord's permission?
Closer to home, how can a declining newspaper attempt to revive its flagging fortunes if it is forbidden to deploy effective price competition? Price is not everything—that is a mistake which, to some extent, the noble Lord makes—but how important is price compared with the quality of the newspaper in building up circulation? If a declining paper such as The Times attempts a major reconstruction and relaunch, is there a better way of getting new readers to sample it than by dramatic price cutting? Those are not hypothetical questions. They are the do-or-die issues which came to a head shortly after I joined the board of Times Newspapers in 1988. When the circulation of The Times fell below that of the Guardian in 1992 or 1993, that may have been the galvanising element to radical reform.
No one supposed that cutting price would guarantee increased circulation—the key to higher advertising revenue. Many a hopeful entrepreneur has embarked on price cutting only to find that it is a spectacular way of throwing ever larger sums into a black hole. The perennial challenge for serious newspapers remains: what is the optimum blend of quality, quantity and price in a newspaper? We are not talking about baked beans, but about sophisticated products. So who is the best judge of the right mixture? Is it the scattered army of readers, faced with a wider choice in Britain than elsewhere in the world, or the noble Lord, Lord McNally, or even the Office of Fair Trading?
At Report stage, the noble Lord, Lord Peston, from his rather lofty professorial perch, airily countered my economic logic with his customary dismissive wave, although without anything remotely resembling coherent argument. Accordingly, I am setting a more scholarly example by avoiding dogmatic assertion. On this occasion I have relied on posing questions, although the answers may seem self-evident. One thing should be clear even for unworldly professors. It is that lasting success in competitive markets for complex products, such as newspapers undoubtedly are, could never be secured by price-cutting alone, however deep the proprietor's pockets.
Among other questions that remain I might ask: is a competitive dynamic market feasible in newspapers, or any other product, if no participant is to risk getting hurt? Why should one participant, say the Independent, be shielded from the decline brought about, to a degree, by its own editorial and management failures? If such 1351 a paper is truly vital to some people's conception of democracy as we know it, why should not readers or backers be prepared to pay enough to save it? Has the noble Lord thought of putting the Independent on the protected list, or perhaps launching a flag day?
I come to the most awkward question of all on the noble Lord's amendment. How can The Times be charged with exploiting a dominant position in the broadsheet market when it was struggling against terminal decline in the early 1990s? In the earlier debate, the noble Lord, Lord Borrie, whom I see in his place, put his finger on the nub of popular concern when he said:News International holds a substantial degree of market power … and is able, for long periods, to cross-subsidise its loss-making newspaper sales from its highly profitable operations in satellite television".—[Official Report, 9/2/98; cols. 915–6]That seemed quite powerful, but the noble Lord's finger pointed in several wrong directions at the same time. First, News International does not run Times Newspapers which is a wholly owned subsidiary, but operates as an independent, free-standing company, also running The Sunday Times and the three supplements. Secondly, the price cutting has been financed entirely within Times Newspapers' own budget, with never a penny piece from satellite television. Thirdly, the only cross-subsidy comes from the highly profitable Sunday Times, just as in the Telegraph stable the Daily Telegraph subsidises the less profitable Sunday Telegraph.
All this talk about predatory pricing is an excitable distraction. Serious, destructive predatory pricing is an extremely rare phenomenon, as shown by two classic texts: McGee on the celebrated Standard Oil case in the Journal of Law and Economics, and Koller's Empirical Study on Anti-Trust in the Law and Economics Review. My experts tell me that the worst recent example of predatory pricing was the collusion of other airlines, backed by government, to drive the challenger Freddie Laker out of the market.
What we have here is a good old-fashioned circulation war, such as helped to test and shape the present newspaper industry. If price competition is forbidden, will the noble Lord try to curb competition through bigger papers, give-away offers, lotteries, travel vouchers and all the other special deals? All such promotions are quasi or substitute price cuts, offering more without extra charge.
It seems characteristic of the Liberal Democrats to prefer a namby-pamby world of harmless, ineffective competition where no one must win lest their friends get hurt. The crowning facts are fourfold. First, The Times has been a loss-maker for most of the century. Secondly, Rupert Murdoch was allowed to take over the ailing paper in 1981 because he could carry current losses, though hardly increasing cumulative losses forever. Thirdly, he has found a strategy to put The Times on the high road towards self-sustaining profitability. Fourthly, his critics are outraged by his success.
My concluding question is: why should we let the Liberal Democrats, and sundry other malcontents, vent their pique against The Times by smuggling through this wholly unnecessary amendment?
§ 5.30 p.m.
§ Lord Borrie
My Lords, I was rather glad that the noble Lord, Lord Harris, made his speech before I made mine because he threw a whole number of red herrings over the trail, especially when he talked about what the 9th February amendment was about, and indeed what the noble Lord, Lord McNally, is proposing today.
The cut-price policy of The Times, which has now lasted for more than five years, cannot possibly be compared with a cut-price promotion, whether literally in price form or in the form of coupons, prizes or anything else. The policy has been going on for a long time. It is not and could not be regarded as a temporary or promotional exercise. Of course I do not know how The Times has managed it. If The Times was wholly isolated, even from the Sunday Times, let alone from the wonderful moneys coming in from other sources of related companies, I do not know how they could have paid the costs of printing, the costs of marketing and the tremendous programme, through television and elsewhere, which has advanced the cause of The Times.
No, my Lords, it has been a predatory policy. A line can be drawn between cut-pricing for a new newspaper on the scene or for an old newspaper, for that matter; but that is quite different from the policy that has now gone on for so long. It is a policy which must have been, and can be demonstrated to have been, damaging, even seriously jeopardising the very existence of rival broadsheets, whether one has the Independent or the Telegraph in mind. Even if their existence is not jeopardised because somehow or other they are enabled to survive, the service that they provide to readers must be damaged because their costs are always under close scrutiny. The mischief of The Times's policy over five years, to my mind restricting or distorting competition, has forced rivals both to follow suit and to reduce costs by cutting the service to their readers.
Leaving aside for the moment what the noble Lord, Lord Harris, has been saying—though I would love to go on—I turn to the Government's view. I have been extremely disappointed both by the manner in which they dealt with the matter in the House of Commons a few months ago and, as it seems from briefing received last week, again today.
The Government's view seems to be that if there is predatory pricing by The Times, or indeed by anyone else, then Clause 18 of the Bill, which covers industry in general and not just newspapers in particular, prohibits all forms of abuse by dominant companies; that it is fully effective; and that it is for the competition authorities—the Office of Fair Trading or the competition commission—to use it. I have carefully considered that argument. It is possibly correct, but it is doubtful. The purpose of the amendment originally passed by this House on 9th February—and, as I understand it, the purpose of the amendment in the name of the noble Lord, Lord McNally,—is to strengthen the law where it is needed in order to make more certain what the Government are saying the Competition Bill provides for.
The Government admit that the European law which is brought into the Competition Bill via Clause 60 defines dominance to mean—I paraphrase only 1353 slightly—such economic strength as to allow a firm to behave to an appreciable extent independently of its competitors and customers. I do not believe that The Times is in that position, because if next week The Times doubled its price would all the readers remain with it? I think not. Some of them would go, or gradually go, to other available broadsheets. It is not possible for The Times to act independently of its competitors and customers.
Mr. Richard Fowler, Queen's Counsel, is the expert in competition law to whom the noble Lord, Lord McNally, has already referred. I quote from his opinion, which is freely available—the Government's legal opinions have been kept entirely secret to themselves. Mr. Fowler said that it is:unlikely that The Times or News International would meet the European Court of Justice tests for dominance",in the broadsheet or general newspaper market.
The Government rely on the case to which the noble Lord, Lord McNally, referred, the Tetra Pak case, about dominance in one market being abused in another related market. Therefore, the Government may wish to argue, as they have in another place, that as News International, with its admittedly minority stake in BSkyB, is undoubtedly dominant in the satellite TV market, abuse in the newspaper market may be a breach of Clause 18. But as Mr. Richard Fowler points out in his opinion, the European Court of Justice held in Tetra Pak that it is only in special circumstances that abuse of a dominant position could apply to conduct in another non-dominated market. It seems to me that although the Government's case is possibly correct, it is unwise for Parliament to rely on it as being correct because it builds a case for the adequacy of Clause 18 and existing European jurisprudence on a feeble foundation.
So why are the Government adamant that an amendment to the Bill to deal specifically with anti-competitive predatory pricing of newspaper proprietors should be rejected? The nub of the Government's objection seems to be an assertion rather than an argument. The assertion is that it would be wrong to treat newspapers as a special case. Why? Competition between newspapers and the availability of a multiplicity of choice is far more important in the newspaper market than it is in other markets because democracy requires that there should be a good range of choice, diversity and plurality. That is important in newspapers but may not be important in ball-bearings or baked beans.
The Government admit that the special Fair Trading Act provisions which deal with newspaper mergers—and solely and only with the merger of newspapers—and specifically refer to the need for diversity are a good thing. The Government more than once during debates in both Houses have specifically stated that they have no intention of changing the Fair Trading Act provisions and are content with them. They could have amended them or they could have got rid of them if they thought that newspapers mergers did not need to be dealt with separately and specifically, but they are keeping them.
1354 I say to your Lordships that a newspaper title can disappear through the pricing tactics of a rival, just as it can disappear by takeover. Therefore, there is nothing peculiar in dealing with the anti-competitive risk of the disappearance of a newspaper by special provision for abuse of power.
The Competition Bill, as it has gone through both Houses, makes special provision for a number of different markets: civil aviation, agriculture and the professions. A short while ago, your Lordships may have received from the Treasury, as I did, a substantial draft of a financial services and markets Bill which may well come before us in the next Session. It provides for a special competition regime for financial services regulators, exchanges, clearing houses and so on. The Government are very clear—and in my view, rightly so—as provided in Clause 60 of the Competition Bill, that our law should be consistent "so far as possible" with EC jurisprudence. However, the relevant Minister, when introducing the new clause on vertical agreements, which we shall deal with later tonight, said in another place that the Government do not intend to copy all the various qualifications and conditions that the European Community proposes. There would be nothing inconsistent with the Government's general approach in the Competition Bill if special provision were made concerning predatory pricing in the newspaper market. That is what the Government are refusing to do and what the noble Lord, Lord McNally, is seeking to move tonight, as he did successfully in another context some months ago.
§ 5.45 p.m.
§ Baroness Oppenheim-Barnes
My Lords, I, too, support the Motion proposed by the noble Lord, Lord McNally. I would have preferred to have seen the previous sweeping amendment retained rather than this narrower version. My interest in Patman/Robinson-type legislation goes back a very long way. Although in those days I was persuaded that that would have been going too far, in the 1980 Competition Act we introduced the flexible power for the Director-General to refer a matter to the Monopolies Commission, with action to follow, if a complaint were made about predatory pricing and it had not been put right at his instigation.
I hope that when the Minister replies he will be able to tell your Lordships what is to happen in the interim period. The 1980 Act will be repealed by this Bill, but this Bill will not come into operation for another year. What will happen to the flexible powers which will vanish with the 1980 Bill until the new Bill is brought into being? Secondly, I believe that every aspect of discriminatory discounting, when it is used as a blunderbuss either to sway opinion or wrongly to gain support, as no doubt is the case in the newspaper industry today, is wrong.
I had hoped not to use the "M" word in this context. However, the noble Lord, Lord McNally, made a mistake in referring to Lord Wyatt's diaries on the subject. I was the Minister responsible at the time and I can assure your Lordships that there was no intervention from the Prime Minister of the day. Our considerations were those which would normally take 1355 place when such an application was made. They included the consumer interests, the national interests and, last but by no means least, unemployment interests. They were extremely important in that particular case, as vouchsafed by the noble Lord, Lord Hams. I would like the noble Lord to withdraw those remarks at an appropriate time.
The situation arises in which the Government, for whatever reason, refuse to listen to people who really do know better. The noble Lord, Lord Borrie, is second to none in his knowledge and experience of these matters. He has the voice of reason, too. For the Government to bypass such expertise, and for whatever reason to say that the interfering European Commission with its second-rate competition policy might not permit this to happen, is not an excuse. In relation to an earlier amendment the noble Lord said that if the Commission acted in a certain way the Government would take a strong line. I should be very interested to know what strong line they would take and what effect it would be likely to have.
I do not wish to detain your Lordships from what will be a most interesting debate, other than to say that I hope that your Lordships will support the Motion tonight.
§ Lord Haskel
My Lords, the noble Lord, Lord McNally, spoke of Dorothy Parker's emotions A to B. The amendment of the noble Lord is also based on two emotions—affection for the newspaper industry and distrust of Rupert Murdoch and News International. In my private moments I share these emotions. But there are times when I must put them aside, and this is one of them. We are here to deal with principles and not with individual cases. Individual cases are for lawyers, regulators and the courts. We are here to lay down the rules.
My noble friend Lord Borrie asks why we should not deal with specific cases. There are good practical reasons why this should not be so. Laws directed at particular cases or individual newspapers—
§ Lord Borrie
My Lords, I have to point out to my noble friend that I did not say that. Of course it appears that we are talking about—to use the "M" word—Mr. Murdoch, because only his organisation happens to be engaged in these practices at the present time. The law we are supposed to be talking about is a general law specific to the newspaper market. It is not specific to any particular proprietor.
§ Lord Haskel
My Lords, I am glad that my noble friend has clarified that point.
There are good practical reasons why laws directed at particular cases, individual newspaper proprietors or their companies, will fail. They will fail because before the ink is dry on the Royal Assent they will have thought of ways round the law. Our job is to deal with the general and not with the specific.
Quite rightly, the noble Lord, Lord McNally, wants to protect diversity and quality in the newspaper industry. We all want diversity and quality in 1356 newspapers—we want it in every industry. I have heard rousing speeches in this House calling for it in the City, in coalmining, in farming. Indeed, I have called for it in the textile industry, where I spent 30 years. But this understandable desire for quality and diversity does not justify special pleading. Innovation and competition produce quality and diversity, not special pleading.
Generally, I am not in favour of special pleading in your Lordships' House because it is often difficult to know where the pleading ends and the lobbying begins. Usually we try to indicate this by declaring an interest. I draw this to the attention of the noble Lord, Lord McNally, because I think it might be helpful for us to know where he stands in view of some of the articles which have appeared in recent press reports.
§ Lord McNally
My Lords, would the noble Lord care to expand? I have no interest to declare as far as the newspaper industry is concerned. If I had, I would have done so. If the noble Lord has any further information, perhaps he would share it with the House.
§ Lord Haskel
My Lords, I was referring to an article in the press which indicated that the noble Lord is in the lobbying business.
The noble Lord is concerned about price cutting. In the textile industry I experienced price wars far more cut-throat and long-lasting than the price war about which the noble Lord, Lord McNally, and my noble friend Lord Borrie are concerned. As a result of that price war many people wear good quality clothes and have nice fabrics in their home. Thankfully, price is not the only factor. That is why the share of the market taken up by the more expensive broadsheet newspapers is steadily increasing.
I shall not support the amendment. That is not because I do not have affection for the newspaper industry nor because I approve of the tactics of News International; it is because it is misplaced special pleading for a particular interest. It specifically deals with behaviour in the newspaper industry. This clouds the clarity which I think it is your Lordships' duty to inject into this Bill. Our task is to see that abuses of market dominance by predatory pricing is clearly tackled throughout the economy and not just in newspapers. Our task is to see that the rules are fair to everyone trading in the European area. The Bill does this and I say leave it alone.
§ Lord Astor of Hever
My Lords, I have no interest to declare, no involvement with the newspaper industry and I have never met "M"—Mr. Murdoch. But I do take an interest in The Times and for this reason I cannot support this amendment.
My family owned the newspaper for over 40 years and, like the Thomsons and Rupert Murdoch, poured money into The Times to keep it alive. The Times has seldom been a profitable concern; indeed, its history is one of journalistic success in the face of financial uncertainty.
I strongly believe that newspapers should not be prevented from using every means at their disposal—promotions, price cutting, adding new sections, 1357 recruiting new talent or investing in new computer systems—to improve their products and to attract new readers, thereby increasing their profitability. I do not believe that The Times should be consigned to yet more uncertainty by having its hands tied over its pricing strategy. I would much rather that The Times increased its circulation by pricing itself into the market, rather than descending into the tabloid fray.
§ Lord Judd
My Lords, I had not intended to intervene in this debate but, in view of some of the speeches that have been made, I feel compelled to do so.
When we debated this issue previously we put our view firmly on the record. The other place has considered our advice and rejected it. That is the right of the other place. I, for one, feel bound to accept that that is the right of the other place because it is consistent with everything that I argue about the relationship between the two Houses. But that does not mean that I have to accept that the other House is necessarily right.
My anxiety remains that, to put it kindly, the force of enthusiasm with which the Government's case has been advanced against the amendment, and the mobilisation of every possible opportunity to tell us that the Bill covers all that the amendment seeks to cover, make me uneasy. I hope I will be forgiven, after quite a considerable life time in politics, for saying so. It might be that the amendment is superfluous, but why this degree of pressure to resist it? It indicates to me that the amendment may indeed cover the issue which concerns us more thoroughly than the Government's own proposition.
Let me leave that particular argument on one side for a moment. It has been established in this debate—and I was sorry that my good noble friend seemed to skirt over it in his latest intervention—that we are not dealing with any ordinary product. We are dealing with the lifeblood of democracy; and the lifeblood of democracy is the information, the quality of information and the reliability of the sources of information on which the public rely for the formulation of their attitudes towards the issues that confront the nation. Anyone who cares about democracy must care about a pluralist media and pluralist newspapers.
I have great respect for the Minister. I do not call his personal integrity or conviction on this matter into question. I just suggest that there might have been a degree of overkill which stimulates the Bolshie part of me. The Government are repeatedly telling us about their concern for the quality of democracy, about their determination to regenerate the constitution, about the whole life of democracy and about the reform of institutions and the rest. I would be greatly reassured if the Minister could say just a bit about the strategy of the Government for not just holding the line of our media in its present diminished state but for enhancing our media, for enhancing the cause of pluralism in our media and for enhancing the cause of different sources of information on which the public should be able to rely.
I suspect—I say this in all modesty—that by simply looking at this issue in the context of the rather specialist legal debate we have had today and earlier in the year 1358 we may be demeaning the issues which I am trying to raise. I think it is high time that we saw a strategy for the future of democracy which has at its heart the cause of pluralism in our media.
§ 6 p.m.
§ Lord Phillips of Sudbury
My Lords, I speak as a member of the Scott Trust which owns the Guardian, the Observer and other newspapers. I say that I speak as a member. In fact, I do not speak for the trust in any way.
There seem to be two primary issues in this debate. The first is whether or not the Bill under consideration should give special regard to, and special protection for, newspapers as a cultural product. The second is whether or not the protections that exist in the Bill as it stands, by incorporating Articles 85 and 86 of the Treaty of Rome, are sufficient.
I think that enough has been said in the debate so far for me not to need to belabour either of those two points. Plainly, in other legislation—the Fair Trading Act—very special consideration is given, for the best of reasons, with regard to newspapers vis-à-vis mergers. The noble Lord, Lord Borrie, gave some other striking examples of special legislative treatment of other areas of economic activity. Secondly, speaking as a lawyer, I really must plead with the Minister that the notion that the issue is beyond doubt in legal terms in relation to Articles 85 and 86 simply is not sustainable. I know my own profession well enough, and I know a little but enough about European law, to be confident that there is a real need in this Bill to make clear beyond peradventure that there are effective safeguards against predatory activities vis-à-vis newspapers. I hope therefore that those points will be carried home tonight.
§ Lord Desai
My Lords, in a previous debate the noble Lord, Lord Harris, referred to malcontents, and he again referred to me, for which I am very grateful. I do not want to speak about The Times, although my previous speech on this subject got me a mention in the editorial of The Times, which had always been my highest ambition. I have nothing against Mr. Murdoch. I have written for the Sun newspaper, and it pays very well. It has stopped hiring me since we came to power. I regret that, but there are some small compensations.
The new clause proposed by the noble Lord, Lord McNally, should not be argued solely in terms of The Times newspaper. That is important. The special pleading referred to by my noble friend Lord Haskel came more from the noble Lord, Lord Harris, who spoke of nothing but The Times, than from my noble friend Lord Borrie, who drew a much more general canvas. Whoever owns a newspaper—whether it is Mr. Murdoch, Mr. Black, Mr. Montgomery, or someone else—we would like him to follow such practice as not deliberately to reduce the diversity and pluralism of our newspapers.
Arguments have already been advanced that in other parts of the Bill special provision is made for particular industries. Therefore, it cannot be an objection that Clause 19 is not in the spirit of the Bill. If Clause 19 is 1359 ineffective, there is no harm in including it. We do not really have legislation so tightly drawn that we could not add a clause. If it were the case that Clause 19 was so feebly drafted and would be so contentious that no one could be brought under its aegis and no one could be punished, lawyers would get lots of money, and good luck to them! No harm would be done.
What people are worried about is that Clause 19 has teeth, and because it has teeth people want to do it down. I think it is a good clause. I voted for it last time and unless my noble friend tells me something entirely stunning—that he accepts the clause—I shall be hard put to follow him in the Division Lobby and I shall probably follow the noble Lord, Lord McNally.
§ Lord Ackner
My Lords, I take it to be common ground that independent newspapers are an essential cornerstone of the democratic process. The Fair Trading Act 1973, which has been referred to more than once, made special merger provisions for the newspaper market. The rationale for these provisions, according to a previous Secretary of State, is that, by increasing the concentration of newspaper ownership,you threaten freedom and variety of expression of opinion".I should have thought that it equally follows that the elimination through predatory pricing of a competitor newspaper would lead again to the concentration of ownership and consequently, to re-quote,threaten freedom and variety of expression of opinion".As I understand the Government's attitude, the main objection to the clause is that it is unnecessary. It can only be unnecessary if the law is certain. It is perfectly clear that the law is not certain. There are cases—this is such a case—where assurance should be made doubly sure. If this clause does not turn out to be necessary, I do not understand, even having listened to the noble Lord, Lord Harris of High Cross, what harm it can do. But if it is necessary and it is left out, then great harm will follow.
I submit to your Lordships that the risk of abuse of power in this field must be eliminated. Accordingly, I will support the clause.
§ Lord Rees-Mogg
My Lords, I wish to take the opportunity again to declare an interest. I do not have the good fortune to be one of the independent directors of The Times but I do write for that newspaper. I have been struck by a couple of points. First, the pricing of newspapers seems to me more complicated than your Lordships' House has altogether realised or indeed altogether been told. Newspaper pricing is designed to maximise the profit which arises out of the cover price of the newspaper and the advertising revenue of the newspaper. There is a third variable, which is how much you have to spend on the newspaper, how many supplements you have, and so on. That variable is very important. The cover price of a broadsheet newspaper produces probably about 30 per cent. of total revenue. The advertising revenue is usually therefore about 70 per cent. of the total revenue.
I spent 20 years deciding on cover pricing when I was on the board of The Times in the old days. You had to decide what effect a particular cover price would have 1360 on your circulation and, through the circulation, what effect it would have on your advertising revenue. Therefore, it is not predatory pricing if you keep your cover price low or actually reduce it with a view to increasing your advertising revenue. That is a commonsense thing to do in commercial terms.
Perhaps I may explain the matter in mathematical terms. Let us suppose that the cover price is reduced by 10 per cent. That reduces the revenue from that source, except in so far as the sales increase, from 30 per cent. to 27 per cent. Let us suppose that that produces a 10 per cent. increase in advertising revenue. That increases the advertising revenue from 70 to 77 per cent. Therefore, one would end up with a total sum of 104 rather than 100.
If the propositions which have been put are correct, obviously in this country there would be a supreme example of predatory pricing of a most unacceptable kind and we should all wish to find laws which would shut it down; that is, the free sheets. The free sheets charge nothing. What could be more unfair than that? A free evening paper is given away to anybody who chooses to have it. That draws in advertising and competes with the local evening paper which is trying to earn revenue from its cover price.
If it were true that you can just consider the cover price, as we have tended to do in this debate and in the previous debate, and say that it is unfair because the cover price is so low, then free sheets would clearly be a predatory practice.
There is one other point I should like to make. I believe strongly in the contribution which newspapers make to democracy. But in this country we have far and away the largest national press of any major country. In London we have five broadsheets and six tabloid newspapers, one of the tabloids being an evening newspaper. All those are published in London and all are fairly good newspapers, with perhaps one or two exceptions. In New York, which is comparable—a major city in a rather similar country—there are four newspapers. We have 11 newspapers in London while New York has only four.
Therefore, it is odd that we should be in a state of acute anxiety when it is, in my view—and I have lived in that world for the whole of my adult life—the competition which has created that situation. The problem with New York is that it has become monopolistic. The position is far more monopolistic in the rest of the United States, where most major cities have only one newspaper.
We have a couple of monopoly newspapers in this country. They are not the newspapers we have been talking about. They are the Financial Times, a great and good newspaper which has a monopoly in the financial and business field, and the Evening Standard, a somewhat less great and good newspaper, which has a monopoly in the London evening field. I should very much welcome it if people entered into competition with them. But it seems to me that the situation in relation to our newspapers does not justify the anxiety which has been expressed.
§ 6.15 p.m.
§ Lord Razzall
My Lords, we have probably reached the stage in the debate when it is appropriate for me to sum up on behalf of the movers of the amendment. First, as a number of noble Lords have indicated, it is a pity that this has become potentially an anti-Murdoch debate. Despite the fact that a number of speakers in favour of the amendment have indicated that their support is based on general principles, we have been assisted by the fact that a number of defenders of the Murdoch position have jumped to their feet, in particular from the Cross-Benches. However, as the noble Lord, Lord Borrie, indicated, the reason that the Murdoch allegations about predatory pricing are relevant is that, as we speak today, those are the current allegations about monopolistic practices in the newspaper industry.
However, this amendment, as proposed by my noble friend Lord McNally, goes much wider than that. It seems to us on this side of the House that when noble Lords decide what to do with regard to the amendment, they must ask two questions: first, does the Bill, as returned to us from the Commons, provide satisfactory protection to the public against anti-competitive practices in the newspaper industry; and secondly, as a subsidiary question, does the newspaper industry require special treatment in the legislation because it has special characteristics that do not apply to other industries?
The answer that my noble friend Lord McNally gives to those questions is that, first, the Bill as returned does not give that satisfactory protection; and, secondly, that there are specific characteristics of the newspaper industry which require special protection to be built into the Bill.
I shall not go over the details of the technical arguments. The noble Lord, Lord Borrie, did that better than all noble Lords in this House put together could have done, being one of the world's experts on the subject. Perhaps I may briefly touch on the opinion to which he referred of Richard Fowler QC. Those of us who have been involved both with the law and the mergers and acquisitions industry know well that lawyers' opinions are lawyers' opinions and for every lawyer's opinion on one side there is usually a lawyer's opinion on the other side, in particular if large amounts of money are involved. But also those of us who have been involved with that industry are aware that one ignores an opinion of Richard Fowler QC at one's peril. As the noble Lord, Lord Borrie, indicated, his opinion is on the record. We do not know the legal basis on which the Government are relying but we have Richard Fowler's opinion that if one looks at the structure of the newspaper industry at the moment, it is unlikely, in his view, that any of the newspaper groups would pass the necessary test for dominance, thereby bringing them within the European law on which the Government are relying to control those practices.
On this side of the House, we disagree with the Government in their view that if this Bill is passed in its existing form, it will provide the protection which the Government believe it will.
Perhaps I may touch on the second and fundamental question to which a number of noble Lords have referred; namely, why the newspaper industry should 1362 require special treatment. It is strange that that issue should still be being debated. After all, in 1973, in the legislation dealing with mergers, it was accepted that the newspaper industry required different treatment. That is now 25 years ago. Throughout that period it has been accepted generally that the newspaper industry requires special treatment in our competition legislation. The reason for that is as the noble Lord, Lord Judd, indicated. It is the industry which is the lifeblood of our democracy. For that reason and that reason alone, the newspaper industry requires special treatment in legislation.
There are a number of fundamental differences in the newspaper industry. Currently, in aggregate, it is worth about £700 million and, in aggregate, shows a net loss of £50 million. No other industry in this country would continue year after year to have that significant net loss were there not some other reason for people wanting to run newspapers. People want to own newspapers not only to make money out of them, if they can, but also for the express and specific purpose of exercising power and influence.
When the Sun ran its headline after the 1992 election,It was the Sun what won it",it did not run that headline because it thought it would increase its circulation but because it believed it had exercised political control over the democracy of this country. When Rupert Murdoch and Conrad Black, through their newspapers—and perhaps I may rephrase that before other noble Lords indicate that proprietors do not influence the policies of their newspapers—when The Times, the Sun and the Daily Telegraph run their campaign against the euro, it will not be because they wish to increase the circulation of their newspapers but because they wish to exercise power and influence over the deliberations of the democracy of this country.
For that reason and for that reason alone, as the noble Lord, Lord Judd, indicated, the newspaper industry requires separate legislation and separate protection. The purpose of my noble friend's amendment, which nobody has mentioned since he introduced it, is to lower the point at which the dominant position test kicks in in our legislation and in our jurisprudence. For that reason, we wish this amendment to be carried.
Finally, in winding up, perhaps I may deal with the point made by the noble Lord, Lord Judd. "All right", he said, effectively, "I agree with everything the noble Lord, Lord McNally, said. However, because of the constitutional position, we made that point; the Commons disagreed with us and have sent it back to us."
I ask noble Lords to bear in mind that on a similar amendment at least 23, if not 25, Labour Members of Parliament defied the three-line Whip in order to support the position that the noble Lord, Lord McNally, is producing today. Seven Select Committee chairmen signed an amendment in the other place similar to the amendment which the noble Lord has brought forward today.
I ask noble Lords finally to think carefully. To revert to our debates last week, perhaps I can paraphrase the noble Lord, Lord Richard. I urge Members of the House 1363 to think independently, to peruse the clause independently, then vote for the amendment, voting against the exercise of power without responsibility which, as we all know, is the prerogative of the harlot throughout the ages.
§ Lord Fraser of Carmyllie
My Lords, the Minister will know, if no one else knows, that during the passage of the Bill through this House at an earlier stage, if we had a consistent theme it was that the regulatory regime set out in the Bill should be as simple and coherent as possible. Accordingly, for that reason, from time to time we resisted what we saw as unnecessary overlaps of regulatory regimes, particularly in relation to the utilities, in an attempt to achieve that objective.
Our position on this amendment is that the existing law, and the law that is presently contained in the Bill, is sufficient to deal with the issue of predatory pricing in the newspaper industry. We may be wrong about that, but it is, I say to the noble Lord, Lord McNally, a consistent position that we have taken throughout the Bill and one to which we intend to stick.
I am bound to say that when such a distinguished lawyer as the noble and learned Lord, Lord Ackner, says that the law is not clear, it undoubtedly troubles me. I should like to think about that carefully. However, the conclusion of his doubts lead me not to believe that we should include Clause 19 in the Bill but, if anything, we should be looking rather more carefully at Clause 18 to ensure that if predatory pricing in the newspaper industry is to be covered, it is properly and consistently covered in that provision. I do not intend to take up much time with that. That is our position and we maintain it.
I say to the noble Lords, Lord McNally and Lord Razzall, that we take some exception to the rather grand view that this debate has become slightly anti-Murdoch. The noble Lord, Lord McNally, indicated that the position we were adopting was not one of consistency or one we have taken throughout the Bill but arose from some hope that we might re-secure the affections of the Murdoch press. I come from Scotland. It is a long time since I thought the Sun in Scotland espoused, with all the historical duplicity of Braveheart, the Scottish national cause. I have long abandoned any belief that the Tory party in Scotland will secure its support again. No, we act on the basis that we consider that the Bill should be kept as simple and clear as possible.
There is only one good reason for sending the Bill back to another place and that is, once again, to enjoy the malicious pleasure of seeing Labour Members of Parliament, both new and old, having to troop through the Lobbies in support of Murdoch.
§ Lord Simon of Highbury
My Lords, yet again I rise after a very high quality debate enlightened by opposition from all sides of the House. This is now becoming a regular occurrence in a very short career. However, I shall battle on because I was heartened by the early entreaty of the noble Lord, Lord McNally, that we should make this an intellectual debate. Indeed, for 1364 some time we were on the right track. Unfortunately, we lost the track when we started to debate how the amendment, which is what we are currently discussing, could be applied to the Bill. I shall return to that point. I make it forcibly because many people have been debating the clause as it stands. That is not what we are debating. That has been rejected. We are debating the "McNally amendment". Many of my colleagues, I think inadvertently, have spoken to the clause, which we should not be doing.
The clause has been rejected but we all recall the issues raised by it which were discussed at length in the House in a debate of very high quality. I shall try to take into account arguments that the Government have been trying to develop which are effective, in my view, in making both the clause as it existed and this amendment untenable and unworkable.
Perhaps I may say straightaway to noble Lords that the Government recognise that the newspaper industry requires and indeed receives special treatment. That is not at issue. There has been no U-turn from the Government on that point. In all our debates the Government have, I hope, been very clear about the importance of having a strong, diverse and independent press in this country. That is why we have the special merger provisions for newspapers in the Fair Trading Act. They are there precisely to protect plurality of ownership and diversity of content. Clearly, there are specific public interest issues—not least accurate presentation of news and free expression of news—which need to be considered in merger cases involving newspapers. That is why we keep the special provisions in the Fair Trading Act.
As my noble friend Lord Borrie reminded us, it is also true that many industries are treated differently. That is absolutely correct. That is why the newspaper industry is treated differently in terms of its ownership and the requirement to meet the test of a strong, diverse and independent press. I have no doubt that the question from my right honourable friend in another place, Robin Cook, which was raised by the noble Lord, Lord McNally, is answered entirely by that point.
However, the Bill deals with matters, as many of my noble friends have observed, which are common across the entire industry. That is the critical point. The Bill is not about ownership; it is about dealing with abuses of dominance and other anti-competitive behaviour which are wrong wherever they occur. That is essentially why we do not need or want to treat newspapers differently under the Bill—the very point made by the noble and learned Lord, Lord Fraser. In that sense the Bill is inclusive. It is about prohibiting abuse across industry at large.
Why do we think it is important? I turn to the point made by my noble friend Lord Judd. He asked if we have a strategic view of why this is important. I have a very strong strategic view, and that is that competition is the essence here. That is what is important in the newspaper industry, as in any other industry, because competition breeds innovation and excellence. if the noble Lord does not believe that, he does not understand our strategy. I believe that in many areas in our nation, 1365 the competitive instinct needs to be developed. That is why the Bill is about competition in every sector of the business. In saying that we do not want to treat newspapers differently. Do not get me wrong. It does not mean that we are complacent about the newspaper industry—far from it. This Government have acted on the need for a stronger competition law. To crack down on anti-competitive behaviour is one of our first priorities. We are serious about competition. There are no special favours. Newspapers will not be exempt from that.
Of course, as many of your Lordships will know and as the noble Lord, Lord McNally, reminded us, the Director General of Fair Trading is already investigating complaints against The Times made by other newspaper companies. If he concludes that there is a case to do so, the director may make a reference to the Monopolies and Mergers Commission under his existing powers. If he does make a reference, the MMC will investigate and report on whether there are any adverse effects to the public interest. If it finds that there are adverse effects, it may make recommendations to the Secretary of State, who would then have wide powers to impose remedies.
I say particularly to my noble friend Lord Borrie—whom we all agree is an expert in this area—that we should wait for the facts of that case to be found. No one should draw conclusions in regard to individual cases until the facts have been found. Of course, once the prohibitions come into force, the director general will have stronger powers to investigate anticompetitive behaviour and to enable him to bring it to an end much earlier.
It is absolutely clear that the prohibition in Clause 18 covers firms abusing their dominance by predatory pricing. The case law shows that beyond doubt. As the noble Lord, Lord McNally, foresaw, the case of Tetra Pak in the European Court of Justice is not only a "fig" for what I am about to say, it is also at the very root, if I do not mix my culinary metaphors, of what we are saying. Following the earlier court decision on AKZO, where prices are below the average variable cost of production, predation should be presumed. In other words, proof of intent is not required. That is an objective test. The ECJ also held that if prices are above average variable costs but below total average costs, conduct is to be regarded as predatory where it can be established that the purpose of the conduct was to eliminate a competitor.
It is clear where the case law stands. But I should also like to examine a second point—the issue of dominance—to which many alluded. Again the jurisprudence is clear. The European Court, for example in the case of Michelin, defined dominance as aposition of economic strength which enables an undertaking to hinder the maintenance of effective competition in the relevant market by allowing it to behave to an appreciable extent independently of its competitors and customers and ultimately of consumers".That definition is well established and well understood. It addresses the right competition concerns. There is no case for applying something different.
1366 Those principles, which are established in European case law, will apply under the Competition Bill by virtue of Clause 60. As your Lordships are well aware, subsection (2) of Clause 60 makes it clear that there must be no inconsistency in the principles applied by courts in applying the domestic prohibition and those laid down by the European Court and any relevant decision of that court. So the principles on predatory pricing established in AKZO and Tetra Pak, and the meaning of dominance established in Michelin and other cases, will apply under the Competition Bill.
It is important to have that clearly in our minds because I should now like to address Amendment No. 7A as debated tonight in some parts, and not Clause 19, which was rejected in the other House.
First, I say to the noble and learned Lord, Lord Ackner, that it is our submission that the clause is not necessary. I understand that to be a legal term, though I use it in the way in which it was put to me. What is more important is our belief that it is unworkable and that is one of the points that I should like to make.
This amendment addresses some of the deficiencies of Clause 19. However, it has problems of its own, as any amendment which seeks to impose a different prohibition in one particular sector is bound to do, as the noble Lord, Lord Harris, reminded us. First, this amendment throws out the whole concept of dominance and introduces a rigid market share test instead. It is simply not right to introduce what is a threshold for investigation in the Fair Trading Act into the very different prohibition-based approach in the Bill. The right test for a prohibition approach is the one we have under the Bill, in which dominance means a position of economic strength which enables an undertaking to act independently of competition. That principle is established in EC case law, for example in the Michelin case.
The opinion of Richard Fowler QC was mentioned as being an open opinion which we must respect. It is interesting that he says we may have to modify the Bill to address newspaper pricing. I return to something I said earlier. Whether or not The Times is dominant depends on the facts. It is surprising that that opinion can reach a view on that position without proper investigation and I wonder whether the eminent QC had the facts in front of him when drawing up the opinion. We are not aware of that. The DGFT could only assess the matter following a thorough investigation. The implication of the opinion is that The Times cannot operate independently of competition. In my view that is a matter to be determined on the facts.
I repeat that we believe the dominance test, as brought from EC law, to be the right test. It is companies which are able to act without worrying about their competitors who are liable to be able to abuse their position. The Bill will deal with such abuses.
By contrast, the rigid market share test in the amendment means it would apply to any national newspaper business with 25 per cent. of the market. There is indeed a 25 per cent. market share threshold in the Fair Trading Act, as the noble Lord, Lord Razzall, pointed out. But that is not the threshold for imposing a 1367 prohibition. It is the minimum threshold for allowing an investigation by the MMC. Under the Bill, the threshold for investigation is that the director should have reasonable grounds for believing that there has been an infringement of the prohibitions. There is no market share threshold. Nor should there be. The test for dominance is based on the real economic circumstances of the case in question, not some arbitrary percentage figure.
Under the Fair Trading Act nothing is prohibited per se. We need to remember that important distinction. The prohibition approach in the Bill is a much more serious proposition. Infringements will be unlawful, liable to stiff financial penalties and to civil actions for damages. This is the strength of the prohibition approach: it provides a much stronger deterrent and more effective remedies.
The other side of the coin is that it must be clear what "abuse" means, and that companies which are not dominant will not be caught. Otherwise businesses which are not dominant, but which are, on the contrary, vigorously competing in a very competitive environment, will not know whether or not what they are doing is lawful. The unintended result of the amendment would therefore be to create uncertainty, stifling legitimate competition and innovation.
The amendment will also create uncertainty by introducing a new definition of prohibited conduct. Clause 18 prohibits the same type of conduct which is prohibited under Article 86, and is to be interpreted according to EC jurisprudence. By contrast, there is no case law on which to draw in interpreting this amendment. Again, business will be left wholly uncertain as to what is lawful and what is not. Noble Lords talked of a Klondike for lawyers. This would be bigger than the Klondike ever was. It could be, in oil terms, another Alaska. If there were that much doubt about how the clause was to be applied, by golly, our loyal friends in the profession would have a good time! These are fundamental objections.
Finally, Parliament has given a great deal of close and careful scrutiny to the question of how the Bill will apply to predatory behaviour. I have tried, because it is important, to place on the table some of the legal doubts about the application of the amended clause. The debate has been very detailed, serious and well-informed. I thank the noble Lord for that.
The conclusion reached in another place in the light of all these deliberations was that Clause 19 should be removed and that an identical amendment to Amendment No. 7A, which we are now debating, should be rejected. Although I shall not go through the arithmetic of the vote in any detail since it may not be necessary, it was a very clear decision of the other House, however many 20s one may count. We may be satisfied that the arguments have been thoroughly and carefully examined during the Bill's passage and that the concerns raised by this House have been thoroughly addressed. On that basis, I urge the noble Lord to withdraw his amendment.
§ Lord McNally
My Lords, I can certainly echo the Minister in regard to the thoroughness of the debate. 1368 I thank him for his unfailing courtesy in dealing with the issues that have arisen. I do not intend to delay the House long on the matter.
There are a couple of "tidying up" points. The noble Lord, Lord Haskel, made a curious intervention. I know the noble Lord to be one of the kindest men in this House; therefore I am sure that he was not suggesting that what I have been doing in relation to the Bill is in any way connected to the way in which I earn my living working for a PR company. Since entering this House, I have voluntarily given a quarterly record of what I do in PR to the Register of Members' Interests. When it was last examined by an investigative journalist, he said that it was the most thorough entry in the House. I challenge any Member to look at it. My interests in this matter go back 30 years. I know that it was a debating point, as was mine to the noble Baroness, Lady Oppenheim-Barnes. I never believed Woodrow Wyatt when he was alive, so why should I believe him now that he is dead? With the noble and learned Lord, Lord Fraser, I know that the Front Bench has arrived at its conclusions in the way that Front Benches always do—from the highest of principles.
I had hoped that the Minister, having heard the noble Lords, Lord Borrie, Lord Desai and Lord Judd, and the noble and learned Lord, Lord Ackner, might have merely echoed Peel at the end of the debates on the Corn Laws. He tore up his speech and said, "You must answer them, for I cannot." Instead, the Minister insisted on sticking to his brief, Tetra Pak and all. We had the old chestnut rolled out that the amendment is unworkable. What the Minister means is that his department does not want to make it work, which is different.
We have a difference of opinion. The Minister believes that by bringing this European jurisprudence into our law, it will provide sufficient teeth to this legislation to offer protection for our newspaper industry. I do not. I also share with the noble Lord, Lord Judd, the concerns that are coming down the track to us. Some massive problems have to be addressed in relation to the concentration of media power and how it influences our democracy.
I have no illusions that this one amendment will meet all those fears. However, it would send out a very strong signal. Yesterday, in The Times, William Rees-Mogg wrote:Debates in the Lords do not count for much; they scarcely travel to the other end of the Palace of Westminster, let alone to the country at large".If your Lordships support this amendment, your voice will carry to the other end of this palace and to the country at large. It will say that this House is a bastion against this vested interest and an over-powerful executive. I ask the House to agree to my amendment in lieu of Commons Amendment No. 7. I wish to divide the House.
§ 6.46 p.m.
§ On Question, Whether the said amendment in lieu of Commons Amendment No. 7 shall be agreed to?1369
§ Their Lordships divided: Contents, 87; Not-Contents, 116.1370
|Division No. 2|
|Ackner, L.||Linklater of Butterstone, B.|
|Addington, L.||Ludford, B.|
|Ampthill, L.||McNair, L.|
|Beaumont of Whitley, L.||McNally, L. [Teller.]|
|Bethell, L.||Maddock, B.|
|Biddulph, L.||Mar and Kellie, E.|
|Borrie, L.||Meston, L.|
|Brightman, L.||Methuen, L.|
|Brougham and Vaux, L.||Miller of Chilthorne Domer, B.|
|Cadman, L.||Milverton, L.|
|Campbell of Alloway, L.||Mountevans, L.|
|Carlisle, E.||Moyne, L.|
|Clancarty, E.||Newby, L.|
|Clement-Jones, L.||Nicholson of Winterbourne, B.|
|Craigavon, V.||Ogmore, L.|
|Crickhowell, L.||Oppenheim-Barnes, B.|
|Darcy de Knayth, B.||Perry of Southwark, B.|
|Desai, L.||Platt of Writtle, B.|
|Dholakia, L.||Razzall, L. [Teller.]|
|Elton, L.||Rodgers of Quarry Bank, L.|
|Ezra, L.||Rowallan, L.|
|Falkland, V.||Russell, E.|
|Fookes, B.||Russell-Johnston, L.|
|Freyberg, L.||Sharp of Guildford, B.|
|Geddes, L.||Shaughnessy, L.|
|Geraint, L.||Skelmersdale, L.|
|Glasgow, E.||Steel of Aikwood, L.|
|Goodhart, L.||Steel of Leaston, L.|
|Gray of Contin, L.||Stodart of Leaston, L.|
|Greenway, L.||Swinfen, L.|
|Grey, E.||Taverne, L.|
|Thomas of Gresford, L.|
|Haddington, E.||Thomas of Gwydir, L.|
|Hamwee, B.||Thomas of Walliswood, B.|
|Harmar-Nicholls, L.||Thomas of Monifieth, L.|
|Harris of Greenwich, L.||Thurso, V.|
|Hunt of Wirral, L.||Tope, L.|
|Inchyra, L.||Tordoff, L.|
|Jacobs, L.||Torrington, V.|
|Jopling, L.||Trenchard, V.|
|Kinnoull, E.||Vinson, L.|
|Kirkwood, L.||Vivian, L.|
|Knight of Collingtree, B.||Waddington, L.|
|Lawrence, L.||Wallace of Saltaire, L.|
|Ailesbury, M.||Crawley, B.|
|Alli, L.||Cuckney, L.|
|Amos, B.||David, B.|
|Archer of Sandwell, L.||Davies of Coity, L.|
|Bach, L.||Davies of Oldham, L.|
|Bassam of Brighton, L.||Dean of Beswick, L.|
|Bell, L.||Diamond, L.|
|Berkeley, L.||Dixon, L.|
|Berners, B.||Dormand of Easington, L.|
|Blackstone, B.||Evans of Parkside, L.|
|Bledisloe, V.||Ewing of Kirkford, L.|
|Burlison, L.||Falconer of Thoroton, L.|
|Burns, L.||Farrington of Ribbleton, B.|
|Carmichael of Kelvingrove, L.||Gallacher, L.|
|Carnegy of Lour, B.||Gilbert, L.|
|Carter, L. [Teller.]||Gladwin of Clee, L.|
|Clinton-Davis, L.||Gordon of Strathblane, L.|
|Cocks of Hartcliffe, L.||Goudie, B.|
|Gould of Potternewton, B.||Murray of Epping Forest, L.|
|Gregson, L.||Nicol, B.|
|Grenfell, L.||O'Cathain, B.|
|Griffiths of Fforestfach, L.||Orme, L.|
|Grimston of Westbury, L.||Paul, L.|
|Hacking, L.||Pitkeathley, B.|
|Hardie, L.||Plant of Highfield, L.|
|Hardy of Wath, L.||Ponsonby of Shulbrede, L.|
|Harris of High Cross, L.||Ramsay of Cartvale, B.|
|Haskel, L.||Randall of St. Budeaux, L.|
|Hayman, B.||Rea, L.|
|Hilton of Eggardon, B.||Rees-Mogg, L.|
|Hogg of Cumbernauld, L.||Rendell of Babergh, B.|
|Hollis of Heigham, B.||Renwick of Clifton, L.|
|Howell of Guildford, L.||Richard, L.|
|Hoyle, L.||Sainsbury of Turville, L.|
|Hughes, L.||Sawyer, L.|
|Hughes of Woodside, L.||Scotland of Asthal, B.|
|Hunt of Kings Heath, L.||Serota, B.|
|Islwyn, L.||Shannon, E.|
|Jay of Paddington, B. [Lord Privy Seal.]||Shepherd, L.|
|Simon of Highbury, L.|
|Jeffreys, L.||Smith of Gilmorehill, B.|
|Jenkins of Putney, L.||Stoddart of Swindon, L.|
|Kintore, E.||Stone of Blackheath, L.|
|Lockwood, B.||Symons of Vernham Dean, B.|
|Lofthouse of Pontefract, L.||Taylor of Blackburn, L.|
|Macdonald of Tradeston, L.||Thornton, B.|
|McIntosh of Haringey, L. [Teller.]||Tomlinson, L.|
|Turner of Camden, B.|
|Mackenzie of Framwellgate, L.||Uddin, B.|
|Mallalieu, B.||Varley, L.|
|Mason of Barnsley, L.||Walker of Doncaster, L.|
|Merlyn-Rees, L.||Warner, L.|
|Milner of Leeds, L.||Wedderburn of Charlton, L.|
|Mishcon, L.||Whitty, L.|
|Molloy, L.||Williams of Elvel, L.|
|Monkswell, L.||Williams of Mostyn, L.|
|Montague of Oxford, L.||Willoughby de Broke, L.|
|Morris of Castle Morris, L.||Winston, L.|
|Morris of Manchester, L.||Wynford, L.|
§ Resolved in the negative, and amendment disagreed to accordingly.
§ 6.54 p.m.
§ Lord Simon of Highbury
My Lords, I beg to move that the House do agree with the Commons in their Amendment No. 7.
§ On Question, Motion agreed to.