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Lord Peston: My Lords, I have no animus against News International. I take The Times, albeit I take it for the crossword and the obituaries, but at least that is better than nothing. If I were not speaking in your Lordships' House, I should be sitting in front of my television set watching Crystal Palace play Wimbledon on Sky Sports 2. So I have no problems with News International.
I support the amendment, much more as a matter of principle than because of any ad hominem argument that might be put forward. I do not see myself as part of any conspiracy to save the Independent. Indeed, until the remark was made I had no idea that that was what the debate was about. I thought that we were debating the Competition Bill, and especially misuse of dominant position and related matters, which is what I am going to talk about.
What the noble Lord, Lord Harris of High Cross, said, seemed to bear no resemblance to serious economics-- a subject which I have studied and taught for many years. However, this is a matter of serious economics and deserves analysis.
I am a passionate believer in competition. I believe that in practice competition is the best, almost the only, way of protecting consumers. Therefore, I do not wish to see the limitation of competition. If I had had the opportunity to participate more in the Bill I would have criticised it more strongly for not doing enough for competition. Therefore, in suggesting a special arrangement I speak as one totally committed to the competitive process as the best way of protecting consumers.
We are talking about predatory pricing and the abuse of dominant position. Therefore, we are not talking about competition as known and advocated by Adam Smith or anyone else in the following 200 years. The type of predatory behaviour we are discussing does not succeed by meeting consumer demand. As a matter of technical economics, that is not its objective. It depends on who survives. In technical terms it is known as a game of survival. A well-established theorem in economics is that the winner of a game of survival is the person with the deepest pockets. It is not the person who best satisfies the consumer; it is the person with the largest war chest. That is why such predatory pricing is perhaps legal when it could be made illegal. It is not anti-competitive behaviour; it is anti-competitive pricing.
I echo a remark made by my noble friend Lord Borrie. The issue is not simply about competition between existing participants in the market; potential competition is equally damaged by predatory pricing. Anyone thinking of entering the serious newspaper business would immediately reflect on what they have observed during the past few years; namely, the ruthless predatory pricing coming from one specific source.
Anyone looking at the situation can see what is happening. The only two people who seem unable to see what is happening are the director general and the Minister. The rest of us can look and see what is happening in the industry; that is, predatory pricing to drive out competitors. That is what is happening and one would like to see it stopped.
My next point was made by my noble friend Lord Borrie and by my noble and learned friend Lord Ackner. There are two possibilities. The first is that we do not need predatory pricing and without peradventure the newspaper industry is covered by Clause 18. Secondly, given that we can all see predatory pricing, we can assume that the moment the Bill becomes law the director general, knowing that he has the powers, will immediately intervene and deal with the matter.
The real point before us, made by my noble friend Lord Borrie and by the noble and learned Lord, Lord Ackner, is that there is, to put it mildly, doubt as to whether the powers exist and can be employed. My noble friend Lord Haskel, when replying to the issue on the previous occasion, left us, to put it mildly, uneasy. He did not say categorically that without a shadow of doubt the powers exist and can and will be used. He used more moderate, careful language, such as "may", "maybe", "perhaps" and so forth.
I, too, am worried about the phrase "marginal cost" in subsection (2)(c), but that is technical. We might be able to produce a better amendment. However, I shall regard the Government as foolhardy if they reject the amendment and make us divide your Lordships' House. I plead from my position on this side of the House. If my noble friend says that he cannot accept the amendment for one reason or another but that there is still time left to come back with another amendment and, more to the point, that he will meet with noble Lords proposing the amendment and come up with something which does the job, I shall be satisfied. I would be unable to support a simple rejection from my noble friend saying that he wants nothing to do with the amendment and that he is perfectly happy. If he is perfectly happy, I can say only that I am not.
Lord Marlesford: My Lords, I rise to speak against the amendment. I declare an interest as an independent national director of Times Newspapers Limited. I was fascinated by the comment of the noble Lord, Lord McNally, that newspapers are different from tins of baked beans; rather like, "New Labour is different from old Labour". Perhaps tonight when we have the vote I shall have a vicarious interest in seeing the relative strength of Blair's babes and old Labour.
The noble Lord, Lord McNally, also expressed the view that Mr. Murdoch is waiting--there has been no doubt in the debate as to who the enemy is--to destroy the competition. He mentioned the Telegraph. Perhaps I may remind your Lordships of two figures. When the price war began--it is a price war--the circulation of The Times was some 350,000 and the circulation of the Telegraph was just over 1 million. The circulation of The Times is now pushing 800,000 and the circulation of the Telegraph is still over 1 million. I sympathise with the Independent, for which there has been a great deal of pleading. The Independent is a fashion. It was an agreeable fashion, like the Spice Girls, but fashions come and go and sometimes they just wither away.
I was interested to hear the noble Lord, Lord Borrie, who was once a keeper of the conscience of competition, tell us that he was worried about being perverse. I believe that his worry was almost justified. He was not correct--and I am surprised that he should make such a mistake--in saying that the losses of The Times were being subsidised by the television company. They are not. At all times, the price-cutting strategy has been financed from within News International Limited, which is a profitable company.
We are talking about the need for more competition. We are talking about a cash flow which in newspapers comes from both circulation and advertising. I believe that what has been done for The Times has been to the benefit not only of The Times and Mr. Murdoch but the country as a whole. It is interesting to know that the circulation of broadsheets in this country during the period we are discussing increased by 14 per cent. We probably have a larger choice of national newspapers than any other country. I hope that in the vote which we are told is to follow no one will decide to vote for the amendment merely because he or she believes that they do not like Mr. Murdoch, especially if they have never met him.
Lord Barnett: My Lords, before the noble Lord sits down, as a director of The Times--and I assume that there are no more left--will he give the House an assurance that it never occurred to the board of The Times that what was being done would put out of business other newspapers?
Lord Marlesford: My Lords, I was never present on an occasion when that was discussed and I have been a director of The Times from the time that the new price-cutting strategy was brought into force. What was intended was to increase the circulation and thus the advertising revenue of The Times and enable it to survive.
Lord Fraser of Carmyllie: My Lords, I rise very briefly because it seems to me that the mood of the House--given the fact that the noble Lord, Lord McNally, has indicated that he will wish to test the opinion of the House--is that I should rise now, if nothing else, to enable the Minister to follow me.
For those who have not participated in our discussions on the Competition Bill, I should explain the position from this Front Bench. Throughout we have sought to achieve a set of competition rules which can be applied generally across all sectors. We have not sought to advocate particular rules for particular sectors or utilities. To be credible, I hope that we can remain consistent.
I believe that we should all agree that predatory pricing should be eliminated from our economic life. I say to the Minister that it would seem to be clearly incumbent on him now to satisfy your Lordships that predatory pricing is indeed covered by the provisions of the Bill.
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