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Tuesday, February 10, 1998 Published at 01:58 GMT

UK: Politics

Lords back ban on 'predatory' newspaper pricing
image: [ Read all about it: the House of Lords takes a dim view of price-cutting ]
Read all about it: the House of Lords takes a dim view of price-cutting

Labour members of the House of Lords rebelled against the government by supporting an attempt to outlaw "predatory" price-cutting by Rupert Murdoch's newspaper group.

The rebel peers broke ranks on Monday to help carry an amendment to the government's Competition Bill, which would ban newspapers from setting low cover prices in an effort to drive rivals out of business.

[ image: News International owner Rupert Murdoch]
News International owner Rupert Murdoch
They defied a three-line whip to pass the Liberal Democrat amendment by 121 votes to 93, a majority of 28.

According to reports, more than 20 Labour peers voted against the government, including Labour's former Deputy Leader, Lord Hattersley and ex-Cabinet Ministers Lord Barnett, Baroness Castle and Lord Shore.

Political commentators say the defeat is an embarrassment for the Government. It will now have to decide whether to reverse the amendment when the bill reaches the Commons and possibly risk another rebellion.

"The Government will consider the implications of the vote and how to advise the House of Commons, " a spokesman for the Department of Trade and Industry said.

Fair cover price?

The vote follows criticism of Mr Murdoch's News International group for dropping the cover price of The Times from 35p to 20p on Mondays and Saturdays.

Rival papers have claimed this is "predatory" price-cutting designed to force weaker competitors, such as The Independent, out of business.

They claim the cash to cover the price-cuts comes from profits from other parts of Mr Murdoch's wide media business and that the cover price charged is much less than the cost of production.

[ image: Lord McNally: introduced the amendment]
Lord McNally: introduced the amendment
Liberal Democrat peer Lord McNally, former political adviser to Labour Prime Minister James Callaghan, urged the Government to ban "predatory pricing" in the newspaper industry.

He called for action which would encourage a "thorough investigation of the policy and strategy" of News International, which owns The Times and The Sun among other interests.

Introducing his amendment, he said: "The present policy of The Times does not make sense unless it is to clear the field of two major competitors - The Telegraph and The Independent.

"What is good business for Mr Rupert Murdoch is not necessarily good sense for a healthy democracy or a diverse and healthy press".

A former editor of The Times, cross-bencher Lord Rees-Mogg, also supported the amendment.

He said Mr Murdoch's "interest is not in freedom but in personal power - the power that gives control over the news and influences much the public reads by the simple process of killing off by unfair competition those who wish to offer choice".

'Agreeable fashion'

But Tory Lord Marlesford, independent national director of Times newspapers, supported the government and opposed the amendment. He said The Independent newspaper was "a fashion".

"It was an agreeable fashion, like the Spice Girls. But fashions come and go and sometimes they just wither away," he added.

Lord Marlesford said the price-cutting strategy had at all times been financed through News International Newspapers, which was a profitable company.

Before the debate, Jane Reed of News International denied that the company was trying to drive-out competitors.

"What we are trying to do is increase the circulation of the Times, to increase the revenue and bring The Times into profit for the first time in living memory," she said.

However, the former head of the Office of Fair Trading (OFT), Lord Borrie, said he was convinced Mr Murdoch was using other profitable businesses to subsidise The Times in order to "eliminate rivals from the field or seriously disable them".

Lord Borrie said it was important to change the law so there was a definite prohibition of predatory pricing. "The point of the amendment is to say that newspapers are special," he said.

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