The Times Pricing Policy: OFT Report (Hansard, 7 June 1999)

§ The Minister of State, Department of Trade and Industry (Lord Simon of Highbury)
My Lords, the Director General of Fair Trading announced on 21st May the outcome of his investigation into complaints of predatory pricing of The Times newspaper. Copies of the director general's press notice arc available in the Libraries of both Houses.

§ Lord McNally
My Lords, those who have read the director general's press notice will welcome the robust terms in which he condemned the practices of Times Newspapers. However, did the Minister read yesterday in Sunday Business that Times Newspapers is now adopting a new tack in terms of competitive practices? The article states: The price war will be less visible on news stands but discounts and special offers will continue to distort the market". Does the Minister still think that it was wise for him to resist the opinion of this House; namely, that the Competition Act requires special protection for our newspaper industry? Will he also consider whether during the period when The Times was acting improperly its independent directors who were charged with protecting the public interest protected that interest or simply acted as apologists for The Times newspaper?

§ Lord Simon of Highbury
My Lords, I did not have the pleasure of reading Sunday Business as I was doing 1140 Sunday business. To my mind it is still open to the Director General of Fair Trading to take into account any pricing practices in making judgments about the anti-competitive behaviour of any company. The noble Lord raises the question of whether the newspaper industry should be regarded as different from any other sector of industry. Happy as I am to answer his question for the fourth time—I am glad the noble Lord acknowledges robust responses to his previous three questions—I do not believe that other than in terms of the merger law the newspaper industry requires any separate legislation in this regard.
As regards the directors and their role, the noble Lord makes a sweeping statement when he says that the company was acting improperly. I did not notice the word "improper" in any part of the judgment. The noble Lord should be cautious about using that word.

Lord Bruce of Donington
My Lords, in order to avoid a stampede into the Library, will the noble Lord give a brief summary of the result of the inquiry?

§ Lord Simon of Highbury
My Lords, my noble friend has called my bluff. I have seen no one move, but this is an extraordinarily interesting matter. I rise to the challenge of summarising what is quite a complex statement and I thank my noble friend for asking the question. The director general concluded that News International deliberately made a loss on The Times during the period between June 1996 and January 1998, but that the price-cutting then stopped. He has obtained informal assurances from News International that it will submit a detailed business statement to the Office of Fair Trading within 10 days of any future price-cutting of The Times which is intended to last longer than one month or which forms part of a series of price changes which has lasted for more than one month.

§ Lord Harris of High Cross
My Lords, as one of the maligned independent national directors, it was kind of the noble Lord, Lord McNally, to alert me that my attendance here this afternoon might be helpful. First, does the Minister agree with the OFT's report when it says that the UK has one of the most competitive newspaper markets in the world? Secondly, are the Minister and others aware that one result of cheaper newspapers has been to increase the total market of broadsheets by 12 per cent—that is, by 300,000 daily copies—which, significantly, includes a large number of younger readers? Finally, does the Minister really consider that the wholly modest words of the Office of Fair Trading justify four references to the OFT over six years, largely at the prompting of the noble Lord, Lord McNally?

§ Lord Simon of Highbury
My Lords, I thank the noble Lord for the tripartite question. Certainly, his grasp of the statistics of the industry is. better than mine. However, I am inclined to answer yes to his first two questions. I am sure that increased circulation is good for those who want to read the broadsheets. I believe that we have a competitive market-place. As regards his final point on the liberty of noble Lords to ask a series 1141 of questions, I would say that if the subject matter is good—in this case I think that it is—I am perfectly happy to answer the questions.

§ Lord Borrie
My Lords, in view of the deliberate selling at a loss that the director general found The Times had engaged in over a certain period, does not the Minister think it appropriate that suitable compensation should be made by Times Newspapers to the Independent, the Daily Telegraph and other newspapers which have suffered economic loss as a result of that practice?

§ Lord Simon of Highbury
My Lords, it is for those newspapers to try to claim compensation if there is a legal basis. The people I considered to be most at risk were the shareholders of The Times.

§ Lord Marsh
My Lords, the Minister says that he sees no reason why newspapers should be treated differently from any other company. Does he agree that there is nothing unusual in companies in every sector selling products at below cost for certain periods of time as a marketing device? Is the Minister aware that, having spent 13 years as the independent chairman of the Newspaper Publishers Association, my recollection is that throughout the whole of that time all of the parties concerned conspired together to condone practices which almost destroyed the industry and would have done so if Murdoch had not intervened?

§ Lord Simon of Highbury
My Lords, I bow to the noble Lord's greater knowledge of what happened during the 13-year period he mentions. I certainly agree that loss leading is an extremely common feature of any business activity. That is why I said it is for the shareholders of companies who indulge in loss leading to decide whether that contributes to the general strategic good of their companies.

§ Lord Razzall
My Lords, for the benefit of noble Lords who have not yet had the opportunity to read the report, will the Minister indicate whether he agrees with accounts the next day in the Guardian, the Telegraph and the Independent newspapers that it represented a significant defeat for the pricing policies of News International, or whether he agrees with The Times that it was a significant victory?

§ Lord Simon of Highbury
My Lords, my own view is that it was both a proportionate and appropriate response to the inquiry that was undertaken.

§ Lord Monkswell
My Lords, is an informal undertaking worth the paper it is printed on?

§ Lord Simon of Highbury
My Lords, it depends who gives the undertaking and how the receiver takes it. However, I am sure that in this case the undertaking will be carefully followed and carefully monitored.

§ Lord McNally
My Lords, I would not like to leave on the record the Minister's rebuff with regard to 1142 my use of the word "improper". I notice that the OFT obtained 13 separate assurances from Times Newspapers with regard to its future behaviour. If its previous behaviour was not improper, what was it?

§ Lord Simon of Highbury
My Lords, I am very happy that the noble Lord chooses the word and defends it judiciously.