OFT Puts News International On Notice Following Predatory Pricing
The Office of Fair Trading (OFT) has put News International (NI) on notice after an investigation into recent ‘predatory pricing’ tactics. The OFT ruled that Rupert Murdoch’s group has used anti-competitive pricing tactics with its discounting of the Times newspaper.
Between 1996 and 1998 the price of the Times was dropped to 10p on some issues , and an investigation by the OFT took place following complaints from the Daily Telegraph, the Guardian and the Independent (see Newsline). Although price cutting is a legitimate competition strategy, competition law prohibits companies from sustaining losses from price reductions in order to eliminate competitors.
John Bridgeman, director general of fair trading, said today: “I have concluded that NI deliberately made a loss on the Times during the period between June 1996 and January 1998 when the Monday edition was sold for 10p, and that this affected competition in the national daily newspaper market. Competitors alleged that they had been forced to cut prices or lose sales and that investment had been reduced accordingly.”
The OFT has not referred NI to the Competition Commission (CC) however. Instead, News International is now obliged to submit a detailed business statement to the OFT within ten days of any future price cutting of the Times. John Bridgeman said: “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.”
Although Murdoch’s newspaper group welcomed the OFT’s decision not to refer the matter to the competition watchdog, Les Hinton, NI’s executive chairman, commented: “News International is perfectly content to continue to provide the DG [director general] with explanations concerning cover price reductions for the Times, though we remain perplexed as to the basis of the DG’s findings on ‘deliberate loss-making’ since we have not had a full explanation of how he reached that conclusion and do not agree with it.”
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