Newspaper war goes to Commons: MPs press Heseltine on predatory policy

MICHAEL Heseltine, President of the Board of Trade, yesterday underscored the Government's disapproval of 'predatory pricing' as he was pressed in the Commons on the battle for newspaper readers.

The Office of Fair Trading launched an inquiry into the price war, led by the Times, in response to calls from Andreas Whittam Smith, editor of the Independent, and Labour MPs.

As MPs returned repeatedly to the subject yesterday, Tam Dalyell, Labour MP for Linlithgow, said that at issue was 'the quality of democracy'. Tony Wright, Labour MP for Cannock and Burntwood, said the use of monopoly power to drive out competitors was 'offensive' to the public interest. A plurality of opinion was vital.

'We have a price war raging at the moment which is profoundly damaging to diversity and profoundly damaging to democracy.' Initiating a debate which continued into the early hours of this morning, Mr Wright warned that if the OFT did not act with urgency serious newspapers might disappear.

The Times, published by Rupert Murdoch's News International, cut its price from 45p to 30p last October. Then a month ago, after a cut from 48p to 30p in the price of Conrad Black's Daily Telegraph, it dropped to 20p.

Robin Cook, Labour's trade and industry spokesman, pointed out that Sir Bryan Carsberg, director general of the OFT, had acknowledged when the Times was cut to 30p that there was 'a thin dividing line' between normal aggressive competition and predatory pricing. If there had been such a dividing line then, it had now surely been crossed.

Replying to Mr Dalyell at Question Time, Mr Heseltine said: 'We don't approve of predatory pricing policies, and if they offend the law we are under responsibility to examine them. But Mr Dalyell would not expect me to make specific comments about matters he refers to unless they've been properly considered.'

Later, as MPs debated the summer adjournment, Mr Dalyell appealed to the Government to act on cross-media ownership, forcing Mr Murdoch to choose between newspapers and satellite television. 'Can the Times, at 20p, seriously be expected to make money without first killing off at least one other broadsheet paper?' If the answer was 'no', it was 'a clear case of predatory pricing', and why was it allowed? Mr Murdoch foresaw a situation 'where we have the Times, the Daily Mail and the Sun only, as national newspapers'.

Mr Murdoch was in effect giving the Times away, he said. Of the 20p, 17.5p went to wholesalers and retailers. Yet the cost of printing each copy was 15p. 'This is a pounds 30m a year subsidy.'