New power to vet media barons

Ministers are to introduce a "Desmond clause" into new legislation to provide a mechanism for them to block takeovers of newspapers by "undesirables" such as porn barons.

Stung by the criticism over Richard Desmond's purchase of the Daily Express in 2000, the Government has decided to provide for special political powers to intervene in the case of newspaper takeovers. Mr Desmond made his fortune in the soft porn industry, with titles such as Megaboobs, Reader's Wives and Asian Babes.

The Government had bowed to pressure from industry and pledged to take politics out of the scrutiny of mergers and acquisitions by leaving the decision on whether to block takeovers to the competition authorities – except when they involved the sensitive defence industry. The Enterprise Bill, now passing through Parliament, takes away from ministers the right to scrutinise all other deals. However, after the furore over Mr Desmond's purchase of Express Newspapers, the Government has decided to introduce an additional clause in the Bill concerning newspapers.

The measure, dubbed the "Desmond clause" by Westminster insiders, would allow ministers to block newspaper deals even when there are no competition issues raised, on the ground of "exceptional public interest". The clause could stop Mr Desmond from buying more newspapers or prevent another pornographer from being able to enter the national or local newspaper markets.

A policy document published by the Government says the move would allow intervention in "cases that involve the public interest in accurate presentation of the news, free expression of opinion and plurality of views in the press".

The revelation is contained in documentation accompanying the draft Communications Bill, which is a separate piece of legislation before Parliament.

One political source said: "This is a panic reaction to the Desmond affair. If the Enterprise Bill goes through as it is, there is no power to stop a future Desmond buying newspapers. This is about making sure that people are 'fit and proper' to own newspapers. What that really is about is porn."

A number of female Labour MPs, led by Clare Short, the Secretary of State for International Development, have spoken out against their party's decision to accept money from a businessman who made his fortune in pornography. Mr Desmond made a £100,000 donation to the Labour Party just days after his purchase of the Express group was cleared.

Mr Desmond's acquisition of the Daily Express could not be blocked on competition grounds as he did not already own any newspapers. Ministers could have intervened on public interest grounds but chose not to. However, that power to step in because of public interest concerns was to have been swept away under the Enterprise Bill.

The Enterprise Bill says: "Competition decisions will be taken by strong, pro-active competition authorities rather than ministers – decisions, taken against a competition based test, will not involve politics so there will be greater certainty for businesses and the regime will be more transparent." However, such is the sensitivity of New Labour about the media that it has now been deemed necessary to have a special safeguard for newspaper ownership.

The communications document says: "In relation to these [newspaper] transfers, therefore, the Secretary of State will retain the power to refer transfers for wider investigation by the Competition Commission by an extension of the provisions in the Enterprise Bill dealing with 'exceptional public interest' cases."

The measure is aimed at giving ministers the option to stop what insiders call "undesirables", such as pornographers and political extremists, from buying a newspaper.

"Those newspaper transfers that potentially raise plurality concerns will require wider regulatory scrutiny in order to protect the additional public interest involved in such transfers," the policy document says.