Peers warned of casualties in newspaper price war

The battle to curb Rupert Murdoch's press power was stepped up yesterday as peers mustered cross-party support for a critical amendment to the Government's Competition Bill. Anthony Bevins, Political Editor, analyses the debate.

Lord McNally, the Liberal Democrat spokesman who once served as James Callaghan's parliamentary aide at No 10, warned yesterday that there could be newspaper "casualties" if the legislation went though without his amendment targeting the predatory pricing of newspapers.

"It isn't just The Independent that is in trouble," he said, "or the Telegraph that is haemorrhaging, the whole structure of our newspaper industry is in anarchy as the moment."

Lord McNally said the Government might be refusing to act on the issue at the moment. "But my prediction is that in a very short time, they will have to do something as they will be faced with major casualties. Then there will be a great slamming of stable doors and a weeping of crocodile tears."

His Murdoch amendment has the backing of Labour and Tory peers, as well as independent cross-benchers - but the Government will impose a three- line whip against it when it comes up for debate in the Lords on Monday night, arguing that it is not necessary to take specific action against Mr Murdoch's price-cutting operations.

But Lord Borrie, a Labour peer and director of the Mirror Group - which owns 46 per cent of The Independent - said that as a former director-general of fair trading he believed there was a precedent in the Fair Trading Act 1973 for taking direct and specific action to protect the diversity of opinion and freedom of expression in the press.

He was supporting Lord McNally's amendment because it would clarify the Competition Bill.

Uncertainty about the impact of the legislation has been compounded by Lord Simon of Highbury, minister for trade and competitiveness in Europe, who said in December that he did not wish to give a view about the impact of the legislation because "this would risk trespassing on the territory of the director-general of fair trading, the Competition Commission, and the courts under the new legislation".

A Labour critic in the Commons said last night: "What are ministers for if they cannot tell us what their legislation is going to achieve?"

Lord Borrie said: "This amendment will address the uncertainty that exists in the Bill - as to whether it will cover what has been going on in the newspaper industry; namely the persistent under-cost pricing of the Times newspaper, to the damage of its rivals, particularly The Independent and the Telegraph."

1 A News International spokeswoman said yesterday the company would co- operate in any inquiry into its tax liabilities, writes Steve Boggan."We comply with the tax laws and co-operate with the tax authorities in all the countries in which we operate," she said. "That compliance and co- operation will continue."

Sources inside the company said news of the inquiry, revealed in yesterday's Independent, came as a complete shock to Mr Murdoch. Until yesterday's revelations, his representatives had no idea he was being targeted for special attention. It is thought his lawyers are planning to contact the tax authorities in the US, Australia, the UK and Canada to establish the nature of the inquiry.