Mergers, Take-overs and Monopolies (Newspapers) Order, 1979: Motion.

Wednesday, 14 March 1979

Seanad Eireann Debate
Vol. 91 No. 7

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Mr. E. Ryan: Information on Eoin David Senior Ryan  Zoom on Eoin David Senior Ryan  I move:

That Seanad Éireann, pursuant to the provisions of section 2 (6) of the Mergers, Take-overs and Monopolies (Control) Act, 1978 (No.17 of 1978), hereby confirms the Mergers, Take-overs and Monopolies (Newspapers) Order, 1979 (S.I. No. 17 of 1979), made under Section 2 (5) of that Act.

[622]Minister of State at the Department of Industry, Commerce and Energy (Mrs. Geoghegan-Quinn): Information on Máire Geoghegan-Quinn  Zoom on Máire Geoghegan-Quinn  The Mergers, Take-overs and Monopolies (Control) Act, 1978 is such a recent enactment that I am sure I need not go into any great detail regarding its various provisions. While Senators will no doubt recall the debate we had in this House prior to the Act's passage into law, a few brief words on the Act might, however, be useful at this stage.

Section 2 applies the provisions of the Act to any merger or take-over where the gross assets of each of the enterprises involved exceeds £1¼ million or where the turnover of each exceeds £2½ million. Any such proposed merger or take-over must, under section 5, be notified to the Minister. The proposed merger is then either approved or referred for investigation to the Examiner of Restrictive Practices. In the latter case, the Minister may, having considered the examiner's report and if he thinks that the exigencies of the common good so warrant either clear the proposal or prohibit it either absolutely or except on conditions specified.

Senators may recall that a good deal of the discussion on the Act on its passage through the Houses centred on section 2 (5). That subsection allows the Minister, where he thinks that the exigencies of the common good so warrant, to declare by order that the Act applies to mergers of a particular class, despite the fact that the enterprises involved in a merger of that class may be below the qualifying assets or turnover “threshold” specified in section 2 (1). Because of the implications which this section had for the general scope of the legislation, the use by the Minister of his powers under the subsection was discussed at some length. The main instance mentioned where an order might well be made was the newspaper sector. The Minister agreed at that time that this would probably be one of the first areas which would be looked at under the section.

The Seanad will no doubt be aware of developments in the newspapers sector over the past number of years which saw a significant change in ownership, [623] mainly of provincial newspapers. These changes have increased the trend towards a high level of concentration in the newspaper sector to the extent that well over 50 per cent of the total market for newspapers is accounted for by two newspaper groups.

Further increases in this level of concentration will, and I am sure the Seanad will agree, be a matter of concern for all. The press has vested in it the very responsible task of informing the public of news and this function together with comment on current affairs constitutes a major influence in moulding public opinion. It is desirable therefore that the dispersal of views and opinions on matters of public importance should be in the hands of as many persons as possible to ensure that the public receives sufficient informed comment to allow of the proper formulation of public opinion. Conversely, it is most undesirable that this public expression of opinion be vested in a small group of persons with the attendant potential for abusing the responsible position of the press.

It was for these reasons that the Mergers, Take-overs and Monopolies (Newspapers) Order was made on 25 January. As I have said earlier, the effect of the Order is to apply the controls of the Mergers, Take-overs and Monopolies (Control) Act to mergers and so on involving at least one enterprise involved in the printing and publication of newspapers irrespective of the turnover or assets of the enterprises concerned. The Seanad will appreciate therefore that all proposed mergers in this area will not be automatically prohibited but rather will they be submitted to the tests of the Act. It may well be, accordingly, that some proposed mergers will be approved depending, of course, on the circumstances of the individual cases.

I am confident that the Seanad will agree that it was right to make this order and that it will support the motion proposed.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  I am unhappy about this order. I accept what the Minister said as to the desirability of [624] controlling, or indeed preventing the further development of the trend, to which she referred, with regard to the level of concentration in the newspaper sector. A desirable order to prevent that trend which would not be as far ranging as this order is or purports to be could have been made. I have very much more than a doubt that the order is not valid and I will not oppose any attempt to correct the invalidity. The subsection of the Act under which the order is made provides for a procedure whereby the Act should apply, notwithstanding the size, to a proposed merger or take-over of a particular class. The exceptional nature of this has been indicated by the Minister, in so far as it requires the notification procedures of the Act to apply, irrespective of the size of the enterprise involved.

This order does not affect a particular class, it affects particular classes. It is not a legal quibble and it is not a draftsman's error that would make it possible to call in aid the Interpretation Act to convert the singular into the plural. This order affects the two distinct enterprises of printers and publishers. The only thing which unites these two enterprises, which could arguably constitute them one class, is that the printers must be printers of newspapers or publishers of newspapers. If the section is read in this fashion, the subsection of that section could render nugatory the entire provisions with regard to the appropriate size for notification.

If the mere fact of printing or publishing a newspaper, which is exceedingly widely defined in the order, is to engage in an activity entitling both different activities to be treated as of the same class, then arguably the order could provide that the carriers, the distributors and the suppliers to newspapers would all constitute one class, united by the single fact that they carried, distributed or supplied to, newspapers. This is very unlikely to be successfully argued and it is most undesirable that it should be, because it is most undesirable that the Mergers, Take-overs and Monopolies (Control) Act should apply to all sorts of transactions irrespective of their sizes. If I am correct, the order [625] does not matter and it would hereafter be held to be invalid, but assuming it is valid the order is excessive in what the affected enterprises are prevented from doing. The printers cannot merge with or take-over the publishers or be taken over by the publishers, and likewise the publishers cannot merge with or be taken over by the printers. Much more important than that, the printers of newspapers cannot take over any other enterprises, whether involved in the business of newspapers or not, and the publishers of newspapers cannot take over or be merged with any other enterprise, irrespective of the size of the printers of the newspapers. If we are thinking of Independent Newspapers, The Irish Press, the Irish Press Group or The Irish Times this would be rather a lot of talk but it is not so, because of the definition of a newspaper.

A newspaper is defined in the order as any periodical, and that has been judicially defined as a work that comes out from time to time and is miscellaneous in its articles. The printing of any periodical that comes out from time to time whether daily, weekly, monthly, quarterly, annually or even occasionally, constitutes an enterprise which means that the printer cannot, irrespective of his size, or the size of what he is contemplating doing, merge or be taken over without notification to the Minister and without all the procedures of approval being followed. We have three evening papers, four daily papers, three Sunday papers and, according to my information, 48 provincial newspapers. All of these are affected. Periodicals intended for circulation to members of a particular trade, profession, or occupation only are excluded from the order.

Clearly the printers or the publishers of periodicals like Hibernia, Magil, Business and Finance, Irish Business, The Irish Tatler and Sketch, The Irish Bystander, Social and Personal, Image, Liberty and Our Boys, which may represent a very small segment of their activities are put in a position where they cannot be taken over, they cannot merge and cannot go into a joint venture in any form of activity which would involve them in more than 30 per cent of the [626] voting right shares in that joint venture, without being obliged to notify the Minister. This is going much further than is required to achieve the purpose which the Minister wishes to achieve. It is unfortunate that this should be done because it is quite unnecessary. What it is desirable to achieve is to prevent the take-over of newspapers, the take-over of the publisher of newspaper and the take-over of the printers of newspapers, but not newspapers as extensively defined as they are here.

In the United Kingdom the Fair Trading Act, 1973, went about this in a much better way. I recognise the difficulties which face the Minister in this area. In the UK part 5 of the Fair Trading Act does not apply the assets test or the turnover test to newspapers: it applies instead, a circulation test. I can see that may not be quite apt for what the Minister has in mind here, and what public policy has in mind to look after. The range of circulation, according to the information I have, of provincial papers stretches from about 4,500 copies to more than ten times that. It would be very hard to do as the UK did and say that this affects a take-over by a newspaper with a circulation of 600,000 and provides a clearance only in the case of a take-over, that it affects only the take-over by a newspaper with a circulation of 600,000, or a newspaper with a circulation in excess of 25,000. Here the take-over that is affected is the take-over by a newspaper of anything, the take-over of a publisher of a periodical, which is so defined as to be much more extensive than the like definition in the UK. In the UK they are simply defined as daily, Sunday, and local newspapers. Concievably here, in certain instances periodicals would include studies, religious newspapers, and religious comment. I know that the Minister does not intend that any of these things should be affected. The law that should emanate from this House should never go further than it is required to go for the purposes of curbing the mischief it has in mind to curb.

I recommend that the Minister consider what I have said and the making of a different type of order, or if the [627] Minister wants to take in printers, orders. The definition of periodical in particular is unhappy and excessive.

Minister of State at the Department of Industry, Commerce and Energy (Mrs. Geoghegan-Quinn): Information on Máire Geoghegan-Quinn  Zoom on Máire Geoghegan-Quinn  I thank Senator FitzGerald for his remarks and for notifying the Department of his intention to raise this argument here today. It gave us the opportunity to go back to the Attorney General to ensure that the order which has been made since 25 January is in fact valid and enforceable. None of us wants to see a situation develop where the control of public opinion, the expression of public opinion and views through the national media, mainly through the newspaper industry should fall into the hands of a very few people. We are all genuinely concerned that because the newspaper industry has a very responsible function, to inform the public, as wide as possible a variety of outlets for the public and free expression of opinion must be preserved. Neither Senator FitzGerald nor anyone else on either side of the House would argue against that case.

However, I will refer to certain aspects of the argument that Senator FitzGerald made. The order, as we know, is being made under section 2 (5) of the Mergers, Take-overs and Monopolies (Control) Act which provides that the Minister may by order declare that the Act shall apply to a proposed merger or take-over of a particular class specified in the order. The proposed order in Article 2 which Senator FitzGerald mentioned, after “mainly” defines the class of merger or take-over by reference to five separate criteria, (a) one enterprise which at least is engaged in either printing, publishing, or printing and publishing of a newspaper. Senator FitzGerald argued that Article 2 involves different classes and cited printing as a separate class, publishing as a separate class and printing and publishing as a separate class. On these grounds the Senator says that the proposed order is ultra vires.

However, what is perfectly clear from section 2 (5) of the Act is that the [628] Minister is not concerned with classifying industries or commercial activities but, in fact, is solely concerned with classifying mergers or take-overs. Therefore, it is entirely a matter for the Minister to define the class for the purpose of the application of the Act, and he has so defined this class of mergers or take-overs by reference to the five criteria contained in the definition of the class in Article 2. The Act itself contains no definition of a class and, in fact, on consulting the Shorter Oxford Dictionary one finds that the definition of class is “a number of individuals, persons or things possessing common attributes and grouped together under a class name, a kind, a sort, a division”. Of all the possible mergers or take-overs in the newspaper industry, the Minister proposes to define a class to which this Act applies by Article 2. Therefore, it is not only my opinion but, indeed, the opinion of the Attorney General, that there is no question of the proposed order being ultra vires.

Senator FitzGerald raised the question of the scope of the order being too wide and, as he rightly said, the British Act does not go quite as far. It was considered best to cast the net wider. I have often said in this House before that it is better to cast the net wide and catch a lot on the basis that the ones that do not come under the Act will be thrown back and, therefore, that mergers and take-overs which are considered by the Minister to be beneficial, and which must go ahead for various reasons, should be allowed to go ahead. Therefore, this order is not anti-merger. We want this to be known and, indeed, I think Senator FitzGerald would agree. It is to help desirable mergers to be cleared immediately and quickly so as to avoid undue hardship to the people involved in the industry, or the various business interests involved. Of course, it is very important that those mergers or take-overs which may be undesirable for various reasons—and we all know the various reasons why they may be undesirable—must be subjected to the greatest scrutiny. It is important because of the very important and responsible role the newspapers have to play that [629] they should be subjected to this scrutiny.

Those are the main points the Senator raised. I should like to thank him for his comments. He has always been very cooperative and helpful in this House and I know that, in raising the point about the definition of class by the Minister, his intention was to be helpful, and I thank him for that.

Mr. Alexis FitzGerald: Information on Alexis Fitzgerald  Zoom on Alexis Fitzgerald  Could I be permitted to say one other thing and to thank the Minister for what she said? Reverting to the point of validity, it would be desirable in the interests of the administration of the Act if the attention of the Attorney General was drawn to the fact that every subsection of that section refers to enterprises, and that the paragraph which is excluded in subsection (5) specifies the size of the enterprises. It may require rather fuller consideration than I gave the Attorney General a chance of giving it.

Question put and agreed to.


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