How the law humbled a monopolist

Imagine this: a keen Blair government, egged on by 19 local authorities, decides to tackle Rupert Murdoch's monopolies head-on. "The fact that half the newspapers read every day in this country are prepared, printed and distributed by News International Ltd - and therefore controlled by just one man - is outrageous," is how Alastair Campbell explains the decision to take NI to court. Lord Jauncey of Tullichettle is appointed to hear the case of HMG v NI; Rupert Murdoch comes to court to plead his case in the 77-day trial and is humiliated by relentless questioning. He and his company, realising the game could be up, pour millions into frantic lobbying of Westminster politicians.

But the first verdict from Jauncey, in his 207-page report, does not look good for Murdoch: "The ultimate result is that some innovations that would truly benefit consumers never occur, for the simple reason that they do not coincide with News International's self-interest," Jauncey concludes. NI's share price plunges; there is speculation that Murdoch may have to split his empire into three or four separate parts.

Jubilation sweeps the government. "This is a great day for British consumers," enthuses Lord Irvine, the Lord Chancellor, at a specially called press conference. "This case is about the protection of innovation, competition and the consumers' right to choose the products they want." Murdoch's spokesman desperately back-pedals, insisting: "We are only at the third inning of a nine-inning game."

Now stop imagining: for this is exactly what is happening here. Except, for "Blair" read "Clinton"; for "local authorities" read "US states"; for "News International" read "Microsoft"; for "Rupert Murdoch" read "Bill Gates"; for "Lord Jauncey" read "Judge Thomas Penfield Jackson" - and for "Lord Irvine" read "Janet Reno, the US attorney-general" (the last two quotes are taken verbatim from her news conference last week, except that "American" has been changed to "British").

It is, though, unthinkable that such a thing could happen in the UK. First, there are no laws like America's that would enable even a willing British government to take on Rupert Murdoch in this way.

Second, even if there were, the case would doubtless fall into the hands of some twit like Jauncey, the retired law lord who last year managed to find that the Dean of Westminster was justified in sacking the Abbey's organist, while simultaneously conceding that he had done nothing dishonest - the reason given for the dismissal in the first place.

Third, who could imagine so establishment a figure as Lord Irvine of Lairg coming out on the side of the little guy in the way Reno did last week, against such an all-powerful figure in Britain as Murdoch?

Fourth, and most tellingly of all, how could Blair afford to challenge Murdoch's media power, when he believed he needed it so much that he made his pact with the devil in order to be elected? (Not that it will do him much good in the long term, though, when Murdochian support gradually shifts to Michael Portillo as the prime minister Britain needs.)

All this is a paradox I enjoy. When it comes to the America-is-perfect-Britain-is-terrible crowd, like Murdoch and his acolytes, the supreme irony is that, under the American freedom and constitution they profess to love so much, the likes of Murdoch could not operate in the US in the way that they take for granted in the UK. It would, simply, be illegal. When Murdoch wanted to buy a television station in Chicago, for example, he was forced to sell his paper there. But Britain's toothless Monopolies and Mergers Commission found that there is no conflict of interest in dual ownership such as this in Britain - even with national newspapers and national television outlets.

Monopolies are not illegal in the US as such, however: they must first be found to harm the consumer and hinder consumer choice.

Thus Judge Jackson, in the Microsoft case, found that Microsoft sold a recent upgrade in their software (from Windows 98 I to II) for $89 when a market price, with competition, would have been more like $49. His finding was that had Microsoft not ruthlessly bullied competitors out of its way - as it has done consistently - there would have been choice in the marketplace that would have lowered prices.

Choice? Not exactly, it seems, what Murdoch wants in Britain, given his ruthless wars against competitors.

I wonder what the US judge would make of Murdoch's predatory pricing of his newspapers in the UK, a policy that would be unlawful in his beloved US? The likes of Reno were not afraid to go for Bill Gates, a man who could buy up Murdoch's entire empire with a swish of his pen, shut it all down for a year, and still remain the world's richest man - simply because, in a very American way, they sensed that it was morally wrong for one man to hold so much power and that downsizing Microsoft would strengthen rather than weaken free-market choice.

But the US has laws and a determination to enforce them that Britain hasn't, and so people like Murdoch get away with it in the UK. Admittedly, we are only in the third inning of a long match. Microsoft plans to spin the case out until 2003, when it hopes President George W Bush will be in the White House; Bush just happens to be a close personal friend of Microsoft's number two, Bob Herbold. But even with a friendly administration, Microsoft and Gates would still find themselves battling an independent judiciary and those 19 states. A humbling lesson for Britain here, perhaps?

Andrew Stephen was appointed US Editor of the New Statesman in 2001, having been its Washington correspondent and weekly columnist since 1998. He is a regular contributor to BBC news programs and to The Sunday Times Magazine. He has also written for a variety of US newspapers including The New York Times Op-Ed pages. He came to the US in 1989 to be Washington Bureau Chief of The Observer and in 1992 was made Foreign Correspondent of the Year by the American Overseas Press Club for his coverage.

This article first appeared in the 15 November 1999 issue of the New Statesman, Guns and the Dome