Outlook: Ducking the important competition issues

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The Independent Online
This is a self-interested piece of commentary, admittedly, but it is also one with a wider significance for business and the way it is regulated. One of our competitors, The Times, is next month planning to cut the cover price of its Saturday edition to 10p a copy. There is also some talk of it doing the same to its Thursday edition. At this stage it is not clear whether this is being considered as a one-off, promotional offer, or as a more permanent thing.

If the latter, it will mark a significant escalation in the broadsheet newspaper price war which has been raging for the past three years. The Times already charges just 10p for its Monday edition and sells at a significant discount to its main rivals throughout the rest of the week.

Rupert Murdoch, proprietor of The Times, has consistently presented his price cutting strategy as part of a long-term commercial endeavour to lift the newspaper's circulation and thereby its profitability. His main target is the market leader, The Daily Telegraph, and in pursuing his quarry, he has spent and continues to spend a small fortune.

On a number of occasions Mr Murdoch has also expressed the view that there are too many national newspapers in Britain. A subsidiary aim must, therefore, be to bring about the closure of a competitor. However, Mr Murdoch has never publicly stated this aim as such. To do so would be to invite action by the competition authorities. As things stand it is next to impossible to bring an action for "predatory pricing" unless it can be shown that the aim is to force competitors out of business. Plainly, it is therefore also next to impossible unless the predator admits to this purpose.

Why does predatory pricing matter? If it brings about lower prices for consumers, then it might be thought of as positively a good thing. That a company is pricing in an anti-competitive fashion is not just notoriously difficult to prove, it is also sometimes hard to argue that there is anything fundamentally wrong with it. In the end, however, diversity of choice is the best and only reliable way of safeguarding consumer and other public interests. It is part of the function of any government to ensure that this variety of choice is preserved and developed, for it is in diversity and the innovation that flows from it that we find the greatest chance of economic success for all.

This is particularly important in newspapers and broadcasting, because diversity of opinion, information and reporting is such a fundamental part of the democratic process. But the same arguments also apply to other industries from supermarkets to banks, and from software providers to metal bashers where big companies use their greater clout and spending power to undermine and crush smaller competitors. Anti-competitive pricing can ultimately prove as damaging to the public interest as an anti-competitive merger.

When in opposition, a number of prominent members of the present Cabinet backed the case for strengthening the law so as to make predatory pricing an easier thing to prove. Since being elected, they have been strangely silent on the matter. The Government's new Competition Bill has failed adequately to address this vital area of competition law and although several amendments have been tabled that would bring the bill into line with the tougher competition practice of the US and Australia, the Government shows no sign of accepting them.

Nor has Margaret Beckett, President of the Board of Trade, or any other DTI minister, so far given an adequate explanation of why not. But then it was Mr Murdoch's Sun wot won it for them, wasn't it? Most people will draw their own conclusions.