Dáil Éireann debate -
Thursday, 22 Jun 1995

Vol. 454 No. 8

Adjournment Debate. - Irish Press Group Dispute.

Mr. E. Byrne

It is now four weeks since the Irish Press and its sister titles, the Evening Press and the Sunday Press ceased publication. We all know that capitalism abhors a vacuum. During the past month we have witnessed the spectacle of News International in particular trying everything from price slashing to scratch cards to fill the vacuum left by the Irish Press. Should they succeed, the responsible analytical journalism of the Irish Press group will be replaced by the “Freddie Starr ate my Hamster” school of pseudo-journalism represented by the Sun and other UK tabloids. It is in the interests of the Irish media landscape that conditions be created which would facilitate a successful relaunch of the Irish Press titles.

I welcome the decision of the Minister for Enterprise and Employment, Deputy Bruton, to establish a commission on the newspaper industry to examine wider issues and make recommendations. I hope that commission's first task will be to monitor the allegations of predatory pricing which I consider were correctly made and levelled against News International. Following a Government meeting on Tuesday, the Minister stated that the Government had set itself the task, among other objectives, of "...securing the highest number of employees in a revitalised Irish Press where there is a long term future for both the business and the employees, and one that is assured commercially and financially." Few would quarrel with that objective. However, I argue that a relaunch of the Irish Press titles will be made more difficult if its market share has been taken up by other publications. The Minister cannot restrict News International's entry into the Irish market. He can ensure that all players in the newspaper market abide by the rules.

Two weekends ago the Sun halved its price from 40p to 20p on the Irish market. I am aware that in its recent report the Competition Authority found that claims of predatory pricing against UK newspapers had no foundation. However, since its interim report was published the position in the newspaper industry has been changing on an almost weekly basis and I believe that allegations of predatory pricing would be upheld today.

I understand that the commission's composition and terms of reference are likely to be announced within the next two to three weeks and that it is likely to sit for approximately six months. A commission along those lines is long overdue and Democratic Left called for the establishment of such a commission at its recent conference. The newspaper industry particularly Irish Press workers, do not have time on their side. Unless appropriate action is taken within the next few weeks to investigate new changes of below cost selling, a relaunch of the Irish Press newspapers may be untenable in terms of its market position.

I am particularly concerned at the recent attempt by the Sun to use scratch cards as a marketing ploy. Those cards may be in contravention of the 1956 Gaming and Lotteries Act and I urge the Minister to examine the matter and ensure that News International titles desist using such gimmicks in the future.

The decision to appoint a liquidator need not necessarily spell the end of the Irish Press titles, although I believe the appointment of an examiner, currently being sought by Irish Press workers, may offer the best chance of saving the titles.

I am also aware that calls have been made for the Government to grant a £10 million loan to the Irish Press group to keep it afloat in the face of liquidation. While those calls are undoubtedly well intentioned, I am not aware of members of the Irish Press management making such a demand, but if that is their thinking, they should make it public. Whether the titles are relaunched following a liquidation or an examinership, the long term future of the titles cannot be guaranteed while the current management holds sway. Messrs de Valera and Jennings have brought a once proud institution to its knees through a combination of sheer ineptitude and intransigence and they must not be allowed to repeat the mistakes of the past. The best opportunity for a successful relaunch of the Irish Press titles lies in a new management operating on a level playing field. I hope the Minister will consider my views.

Minister of State at the Department of Education (Mr. Allen)

I thank Deputy Byrne for raising this issue on the Adjournment.

The newspaper industry plays a vital role in covering issues important to democratic debate. I am sure we all agree it should provide stable employment, diversity of choice to the consumer and allow expression for the varied points of view that make up a pluralist society. It should also preserve quality and cultural expression and balance the right to privacy with the right of the public to know. It is stating the obvious that the absence from the market of the three Irish Press titles has reduced the choice of papers available to consumers and this is regrettable. I stated previously that the country would be a better place if a revitalised Irish Press group could have a viable vibrant and commercial future.

I have already expressed the view that the position in which the Irish Press finds itself is essentially a business one compounded by industrial relations problems. The Irish Press titles have been suffering radically declining circulation over a long period. The relaunch of the Irish Press in tabloid form in 1988 did not assist the decline in circulation. The group has also had unhappy investment experiences with the Ingersoll Group which have gone seriously wrong. This has led to protracted litigation. The recent Supreme Court judgment represented a further serious setback for the Irish Press group. The industrial relations record of the company over a long period has been far from good and the current difficulties are a further indication of that. The new situation that has emerged from the company means that it would be inappropriate for me or the Government to finalise a decision on the Competition Authority's recommendation until the outcome of the company's actions become clear.

I want to make it perfectly clear that my decision in relation to the alleged breaches of competition law have nothing to do with the current position in the Irish Press. The key issue for the group is new, additional investment. I also want to make it clear that a decision on whether the Independent group's investment in and loans to the Irish Press group are in breach of sections 4 and 5 of the Competition Act, 1991, can only be made by the courts on foot of what undoubtedly would be a lengthy court action. A decision to pursue such an action would not offer an immediate solution to the current problems facing the Irish Press group. I am, however, keeping the evolving position, including the implications of today's High Court application for the appointment of an examiner, under continuous review and taking appropriate legal advice.

I presume the Deputy is referring to the price cutting engaged in by certain titles since the Irish Press titles went off the street and the question of predatory pricing. I refer the Deputy to the conclusions of the Competition Authority in its interim report of its study on the newspaper industry, in particular, the conclusions in regard to predatory pricing in economic and legal contexts. In its report the Competition Authority was of the view that there is no evidence to support claims that UK newspaper groups have engaged in predatory pricing of newspapers within the State. The Competition Authority said that to establish predatory pricing has taken or is taking place, certain strict criteria are required and had not been met in the case of UK newspapers.

Predatory pricing has a precise definition. It is a policy of price cutting by a firm in a dominant position designed to reduce or eliminate competition with the result that the firm can reap higher profits at a later stage. For pricing to be regarded as predatory, profits are reduced for a period so that the long term effect on the market will ensure that these profits can be higher at a later stage when competition is eliminated.

To demonstrate predatory pricing, it is necessary to show that the alleged predator is dominant; that the objective of price cutting is to reduce the number of competitors by eliminating one or more of them or to weaken them to a point where they can no longer offer effective competition; and that the predator will benefit from a predatory pricing policy by being able to earn supra normal profits in the future arising from the elimination of competition.

The Competition Authority was of the view that UK newspapers were not dominant and that predatory pricing was not taking place in the Irish market in regard to UK newspapers. The objective of the pricing policy of the UK newspapers was not to eliminate competitors or to deter them from competing aggressively, thereby reducing the degree of intensity of competition in the marketplace.

The Competition Authority in its report distinguished between predatory pricing and aggressive price competition and its conclusion was that Irish newspapers may have suffered because of aggressive competition from UK newspapers. However, aggressive competition in a marketplace is not illegal.

Given the nature of the Irish newspaper industry and the large number of titles on the market, predatory pricing by one foreign newspaper could not ensure with certainty that consumers would switch to its titles. Therefore, the title accused of predatory pricing would not be able to make the profits necessary to make predatory pricing worthwhile and neither would it eliminate competition. I have accepted the Competition Authority conclusions. Therefore, there is no action to be taken in regard to the pricing policy of UK newspapers.

Earlier this week I announced that I propose to establish a commission on the newspaper industry to examine the wider issues facing the industry and to make recommendations. The terms of reference and the composition of the commissions are currently being finalised.