Murdoch guilty in `Times' price war

RUPERT MURDOCH'S News International was found guilty yesterday of deliberately selling The Times at a loss, after an investigation into predatory pricing by the Office of Fair Trading.

The OFT also warned that News International had been put "on notice" that any future price-cutting campaign could result in fines or a referral to the Competition Commission if it was found to be anti- competitive.

News International has agreed to give the OFT a detailed justification of any future price cutting within ten days of the reductions being introduced.

John Bridgeman, Director General of Fair Trading, said: "We would then be able to come to a rapid decision about whether such price cuts were anti-competitive and advise News International. The company is now on notice. The UK has one of the most competitive newspaper markets in the world and we intend to keep it that way."

The OFT's investigation followed complaints from The Independent, The Daily Tele- graph and The Guardian that The Times was engaging in predatory pricing after cutting its cover price in 1996 to 10p on Mondays.

Mr Bridgeman concluded that the newspaper had been deliberately sold at a loss between June 1996 and January 1998, since when the cover price has been increased several times. He also ruled that price-cutting by The Times had harmed competition in the national newspaper market.

But he did not find that News International has been engaging in predatory pricing. Competition lawyers say that the test of predatory pricing is a daunting one. The definition the OFT uses is similar to that which applies in Europe and involves "the deliberate acceptance of losses in a particular market in order to eliminate a specific competitor, so that supra-normal profits can be earned in the future".

In the past nine years, the OFT has only proven three cases of predatory pricing - all of them involving bus companies - despite receiving hundreds of complaints each year.

Under present law the OFT could not have fined News International even if it had established that predatory pricing was taking place. Competition lawyers say it would also have been difficult for its competitors to have successfully sued the company.

From next March, the OFT will have wider powers under the new Competition Act, enabling it to fine companies up to 10 per cent of turnover if they are found guilty of abusing a dominant market position.

The OFT will also have the power to intervene immediately to stop any practice it deems may be anti-competitive while a full investigation is carried out. Critics of the existing laws say this will help to overcome one of the biggest drawbacks in the present system - that even when instances of predatory pricing have been proved it is too late to help the victim of the practice.

Brendan Hopkins, chief executive of Independent Newspapers UK, the owner of The Independent and The Independent on Sunday, said in response to yesterday's ruling: "We welcome the Office of Fair Trading's statement regarding the predatory pricing activities of The Times. Independent Newspapers initiated the complaint and has diligently pursued the case against The Times, both in the Lords and in the Commons, and latterly through the OFT. We also welcome the ruling because it means that no further advantage will accrue to predatory pricing activity, ensuring that the quality of editorial content, in which The Independent already excels, will once again be the only route to competitive advantage."

Leslie Hinton, News International's chief executive, told the OFT that it had no intention of cutting the price of The Times in the current trading conditions.

But if it does cut the cover price, it has undertaken to give the OFT a detailed explanation setting out the rationale for the price cut, how long it will last and what increase in sales it is designed to achieve. News International will also have to supply forecasts of revenues and profits for The Times.

Lord McNally, the Liberal Democrat peer who sought to amend the Competition Bill when it passed through Parliament, welcomed the "robust language" used by Mr Bridgeman. "The concentration of media power nationally and globally and the implications of cross- media ownership mean that there will still be the need for continuing vigilance if the diversity and independence of our press is to be guaranteed," he said.

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Administrative Assistant / Order Fulfilment

£14000 per annum: Recruitment Genius: An exciting opportunity to join a thrivi...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + Uncapped OTE: SThree: Trainee Recruitment Consulta...

Recruitment Genius: Production Operative

£13000 - £17000 per annum: Recruitment Genius: Due to a period of sustained an...

Day In a Page

Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

Cameron lowered the flag for the dead king of Saudi Arabia...

But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

Humanity must be at the heart of politics, says Jeremy Corbyn
Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

Joe Biden's 'tease tour'

Could the US Vice-President be testing the water for a presidential run?
8 best children's clocks

Tick-tock: 8 best children's clocks

Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

How Isis profits from destruction of antiquities

Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

'If we lose touch we’ll end up with two decades of the Tories'

In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

The Arab Spring reversed

Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

Academic claims King Arthur was real - and reveals where he lived

Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
Who is Oliver Bonas and how has he captured middle-class hearts?

Who is Oliver Bonas?

It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
Earth has 'lost more than half its trees' since humans first started cutting them down

Axe-wielding Man fells half the world’s trees – leaving us just 422 each

However, the number of trees may be eight times higher than previously thought
60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

60 years of Scalextric

Model cars are now stuffed with as much tech as real ones
Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

Why are we addicted to theme parks?

Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
Tourism in Iran: The country will soon be opening up again after years of isolation

Iran is opening up again to tourists

After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
10 best PS4 games

10 best PS4 games

Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
Transfer window: Ten things we learnt

Ten things we learnt from the transfer window

Record-breaking spending shows FFP restraint no longer applies