Dáil Éireann debate -
Wednesday, 7 Jun 1995

Vol. 454 No. 1

Adjournment Debate. - Newspaper Prices.

Mr. E. O'Keeffe

Thank you for allowing me to raise this matter on the Adjournment and the Minister for Enterprise and Employment for coming into the House to reply.

The recent and well signalled problems of one of our largest newspaper publishers have evoked much sympathy for the print, distribution, commercial and administration workforce involved. The demise of old titles brings out the best of us. However, the readers and advertisers did not like the product enough to support it and make it financially viable. New competent management with commercial instincts, adequate financial strengths and an unrestricted workforce of 300 may, I hope, be able to relaunch some of the Press group titles.

The long term future of other newspapers is also a matter of concern. Competition is tough in the marketplace and while we write reams and talk tirelessly of dominance in our print media, we may be aiming at the wrong target. Where is the Competition Authority report on the Independent group? Can it be presented to the Dáil?

Since the launch of the Evening Press approximately 40 years ago there have been many changes. The Evening Mail is gone and the Sunday Review, the Sunday Journal and the Sunday Tribune mark 1 have all come and gone. The Sunday World and The Star— papers with many aspects of a successful UK formula — have been success stories and publication of the Sunday Tribune mark 2 continues. The most significant change started with a trickle in 1947, aided by air freight since 1949. In the last decade of this century English newspapers and tabloids present major competition to Irish organs. Since they started publishing Irish editions, the British commonwealth publishers are well placed to fill the void created by a silent Sunday Press. The Sunday World circulation has increased due to competition and the other recent successful entrant to the market, The Star, is 50 per cent UK owned.

Are the Cork Examiner, The Irish Times and the Irish Independent safe? Big names have already fallen in Washington, New York and London. With the economies of scale enjoyed by British tabloids and the price wars the London broadsheets can maintain due to very rich owners who like a fight, Irish newspapers selling at 80 pence to £1 are exposed. Each Irish daily can cost up to £5.70 per week whereas, on average, English tabloids cost £2.70 per week, the lowest being £2.40 per week; English qualities are even cheaper.

While the National Newspapers of Ireland has, with some justification, complained about the price of British newspapers here, the Competition Authority was not impressed. Even if the National Newspapers of Ireland make a better case, European competition law may favour UK publishers. If it is not possible to force an increase in UK prices, can Irish papers reduce their charges? In an effort to avoid a recurrence of recent events, radical changes in production methods and costs, together with the pooling of resources, are urgently required. This should be done now, otherwise it may be too late.

In the short term Sunday and daily newspapers, including English newspapers, should be exempted from VAT. Similar revenue could be raised by a newspaper registration tax shared on the basis of circulation, similar to the bank levy on deposits. In that way, Irish newspapers would benefit by approximately £3 million per annum. I urge the Minister for Enterprise and Employment, to request his colleague the Minister for Finance to make this revenue neutral change. It would protect Irish jobs and would not affect the considerable workforce involved in distributing and selling English newspapers here. I look forward to a satisfactory reply.

Minister for Enterprise and Employment (Mr. R. Bruton)

The Deputy will have to forgive me if my response is more unprepared than the norm because I did not realise that under the heading of "the price of newspapers in Ireland", the Deputy would raise such a wide range of issues. I will attempt, however, to respond to them.

There is no doubt that Irish newspapers have faced price competition which has caused difficulties in the market. Over the past 20 years the price of Irish newspapers has increased by 90 per cent in real terms — 90 per cent faster than the cost of living — pushing up the real price of Irish newspaper titles. While the price of British titles also increased during that period, the increase was only half that real rate. Therefore, in recent years Irish newspapers have become more expensive relative to British newspapers and this has adversely affected the marketplace. At a time when the sale of British titles has been increasing there has been a decrease in sales of Irish titles. The Deputy correctly indicated this is not solely a question of price and that much of what happened in recent years resulted from the rapid growth of tabloids. The 16 per cent increase in the sale of daily newspapers was entirely driven by the increase in tabloid newspaper titles. The tabloid market is dominated by British titles which sell 60 per cent more per week than Irish titles. As the Deputy pointed out, the emergence of The Star brought an Irish presence to the daily tabloid market.

The Deputy correctly identified the tough competition from British titles. The Competition Authority considered the issue of predatory pricing, the only issue that would be amenable to competition law. Authority concluded that predatory pricing which has a specific meaning in competition law was not taking place. First, one must prove dominance in the market concerned second, that the paper is being sold below cost and, third, that the intention was to inflict damage from which the newspaper inflicting the damage would benefit. Under none of those headings did the Competition Authority find that action by the British newspapers constituted a breach of law and as a result did not conclude that there was predatory pricing.

I know that the National Newspapers of Ireland are anxious to look at a different issue, namely, simply the banning of below-cost selling, which would be a new issue not covered by competition law which would, of course, require careful assessment.

As the Deputy knows, there is no detailed price control in Ireland at present; that has been abandoned since 1986 with the support of all Governments since then. However, we are determined that the effectiveness of competition law will be enhanced. I am glad that all parties in the House are supportive of measures to give the Competition Authority enforcement powers to allow it to investigate third party complaints about unfair competition and instigate its own investigations. Stronger competition powers will be important in ensuring there is fair play.

The other issue Deputy O'Keeffe rightly raised is the need for our newspaper industry to address its costs problems. As I indicated earlier, there is no doubt that the price increases have been out of line with the British press and our newspapers face serious problems as the costs of many of the British titles are much lower. This has not arisen solely from longer production runs; there is an issue there remaining to be addressed by the industry.

The Deputy also raised two issues in relation to tax. As he rightly pointed out, essentially these are matters for the Minister for Finance to whose attention I will draw the Deputy's views on this matter which, in turn, would have to be considered within the context of budgetary preparation.

The Dáil adjourned at 9.5 p.m. until 10.30 a.m. on Thursday, 8 June 1995.