Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025

Lord Fox Excerpts

Tuesday 22nd July 2025 Lords Chamber

Moved by

[Lord Fox]

To leave out from “that” and to insert “this House declines to approve the draft Enterprise Act 2002 (Mergers Involving Newspaper Enterprises and Foreign Powers) Regulations 2025, as the proposal to allow foreign states to own up to 15 per cent of UK newspapers constitutes a direct threat to the freedom of the British press; and is contrary to the policy intention of the Digital Markets, Competition and Consumers Act 2024.”

[Lord Fox (LD)]

My Lords, I thank the Minister for her kind words and the time that she gave to meet virtually.

Your Lordships will see that this is a fatal amendment. I know that this House is not in the habit of supporting such actions, but to do so is perfectly in order. The Joint Committee on Conventions 2006 report concluded that

“in exceptional circumstances, it may be appropriate”

for the House of Lords to reject statutory instruments.

“This is consistent with past practice and represents a convention recognised by opposition parties”.

I shall seek to demonstrate that this instrument is indeed an exceptional issue, that ownership of our press is a matter of great public policy importance and that we are fully entitled to defeat this statutory instrument.

I was encouraged by the fact that His Majesty’s loyal Opposition tabled and voted for a fatal Motion regarding the Chagos treaty on 30 June this year. Clearly, they also believe that some issues warrant fatal Motions. I am deeply grateful for the support and friendship of colleagues right across party lines, including Conservative, Labour, Cross-Bench and independent Peers. We all understand how serious it is for the Lords to take such an action. We cannot sit by and watch this happen before our eyes.

I remind fellow noble Lords that the Government’s planned secondary legislation deliberately reverses the explicit will of your Lordship’s House: to be specific, the then Digital Markets, Competition and Consumers Bill, debated in the House of Lords in March 2024. Hansard is clear regarding the intention of amendments made to the Bill. At Third Reading, your Lordships loudly welcomed a complete ban on foreign Governments having either ownership of or influence on our press. This was greatly motivated by Members’ concerns about the proposed acquisition of the Telegraph Media Group that included a stake from a company ultimately controlled by a member of the United Arab Emirates Government. Subsequently, the then Government said that they would use secondary legislation to introduce an exemption for shareholdings of up to 5%. This was introduced to avoid unintended consequences. Then there was the consultation, to which the Minister referred, run by the Department for Culture, Media and Sport—DCMS—on the threshold.

Your Lordships’ Secondary Legislation Scrutiny Committee singled out DCMS for its decision to treat information about the respondents to a public consultation confidentially. It was critical, and it noted that

“this is an unusual approach”.

Indeed, it is. It took freedom of information requests to ensure that the Government published the consultation responses just a few days ago, with redactions. It should not have been necessary to resort to FoI requests, especially given the weight the Government place on this consultation, but it is easy to see why DCMS was reluctant to publish the results, as there is a strong vested interest that runs through the responses. Three of the four responses—yes, there were just four—were from parts of the newspaper sector that are almost certainly seeking foreign investors.

The Government said that they have carefully considered the consultation responses and introduced this instrument as a result. DCMS explains that the

“new threshold responds to feedback received during consultation from newspaper groups affected by the new regime”.

This is hardly surprising, given the nature of the handful of respondents and their obvious hunger for investment.

--- Later in debate ---

[Baroness Twycross (Lab)]

We have the regulations before us. I cannot be more explicit than I have already been.

To continue, investment by single or multiple state-owned investors will be capped at 15%. The regulations that we aim to bring in by the end of October will require a state-owned investor taking a direct holding of shares or voting rights of more than 5% to notify the Secretary of State of the transaction. This will enable her to quickly review any cases where there are suspicions that the shareholding may be more than a passive investment and to refer appropriate cases to the CMA for advice on whether a foreign state merger situation has emerged. This will be a condition of the state-owned investor exception. A failure to make this notification or making it late will mean that the investment in question is prohibited.

The noble Lord, Lord Fox, asked about the redactions in the consultation responses and why they were not published earlier. I have already outlined my acceptance of the criticism from the noble Baroness, Lady Stowell. DCMS has now published the responses. One organisation asked for its views not to be attributed and for some information to be redacted on the grounds of commercial confidentiality. The original consultation by the previous Government specified that responses would not be published and respondents would not be named. This Government’s current consultation makes it clear that they will be.

The noble Lord, Lord Newby, asked about the Secretary of State’s role. The legislation requires that the Secretary of State must refer a merger to the CMA if she suspects a state-owned investor is not entitled to the exception or is not complying with this requirement. This should provide protection in the interim, and was why we did not think the original SI defective. The one in draft was published in response to concerns, not, in our view, to correct an error, although it puts everything beyond reasonable doubt and was a reasonable request.

The noble Lord, Lord Fox, asked about the protections we have against hostile states trying to acquire influence or control. The FSI regime strengthens the Secretary of State’s powers and sits alongside her powers to intervene in a relevant merger situation on the basis of public interest concerns. These powers can be applicable in acquisitions involving state-owned investors within the threshold set by the draft regulation. Taken together, the existing legislation, draft regulations and second statutory instrument would allow the Government to act to guard against the kind of malign interference with UK democracy and press freedom about which noble Lords are concerned.

Additionally, the National Security and Investment Act 2021 can enable the Government to call in and, if necessary and proportionate, block, unwind or impose conditions on acquisitions of control over UK newspapers, including acquisitions that may give rise to national security concerns.

[Lord Fox (LD)]

I thank the noble Baroness for giving way. As I recall from debates on that Bill, there was a huge annexe that listed all the things within the remit of the National Security and Investment Act, but I did not notice newspapers. Will the Government be bringing forward an amendment to that Act to include newspapers, as she has just suggested?

[Baroness Twycross (Lab)]

My understanding is that they already can, on the basis of the Act. I do not have the detail that the noble Lord has asked for, but I have been told definitively that that is an existing power within that Act. I can only commit to write to the noble Lord explaining where in the Act that comes.

The noble Lord, Lord Clement-Jones, suggested—the previous Government put this out for consultation—that the FSI threshold should be lower. We believe that the 15% cap we have arrived at is a more straightforward approach than the one consulted on. It strikes a careful balance, enabling newspapers and news magazines to receive investment from a wide range of sources, while ensuring that foreign states are not able to acquire control or influence over editorial and other decision-making through that investment.

The noble Lord, Lord Clement-Jones, asked how things could be truly passive. The legislation would not permit state-owned investors to acquire rights to directly or indirectly appoint or remove directors or other officers of the company. Nor would it permit a state-owned investor acting on behalf of a foreign power to hold the right or ability to direct, control or influence, to any extent, the policy or activities of UK newspapers. Interference in a newspaper’s editorial policy or personnel decisions about senior staff or feature writers is not permitted. Even if a state-owned investor has 15% of the voting rights, it cannot actively use those voting rights in a way that influences the company’s policy or activities, such as editorial direction. The investment must be truly passive to be permitted.

The noble Lord, Lord Newby, asked about the limited use of FSI. It is important to remember that this regime sits alongside the existing media public regime. This works in parallel so that the Secretary of State, as well as having to refer any case with reasonable grounds, can look at whether the transaction raises wider public interest concerns.

I repeat that it is important to give UK media and potential investors greater certainty about the overall regime. I appreciate that it has taken quite a long time to get here. Newspapers have been calling for this, and it will help end uncertainty and support the overall sustainability of the UK newspaper industry at a time when accurate news and public-interest journalism are more important than ever. I do not think it an exaggeration to say that there is an existential problem; I agree with the noble Lord, Lord Black of Brentwood, when he says that, effectively, it is five minutes to midnight.

The power to make exceptions is included in the Enterprise Act 2002, following the amendments made in the Digital Markets, Competition and Consumers Act 2024. We looked at the issue of thresholds and came to a different conclusion from the previous Government. It is different, but arguably not radically different, given that their upper limit for diversified businesses was 10%. I know that is arguable, and I am not sure I will convince all noble Lords. I have, however, set out our arguments as to why we settled on 15% and why—in my view, reasonably—we gave weight to the views of UK newspaper groups, which are directly affected by the FSI regime.

The issue of the exception threshold was left open by the general election last year. It is both right and responsible for the Government to look at this afresh; indeed, I am sure we would have been criticised by some noble Lords had we simply ignored the consultation. Our intention in coming to a final view on the 15% threshold is to balance the need to protect press freedom from foreign state influence with not setting the threshold so tightly that it deters investment in newspapers.

The ongoing dialogue with noble Lords has demonstrated commitment across all parts of the House to guarding against malign influence on UK democracy and press freedom, an aim this Government share. However, while it is entirely appropriate for the House to discuss the fatal amendment today and to raise the concerns noble Lords have expressed, there is a strong convention against exercising the power to annul. We feel that, when we were in opposition, we respected this.

Noble Lords will not be surprised that I agree with the noble Lord, Lord Lansley, and the noble Baroness, Lady Stowell, that it is also the wrong thing to do in terms of policy. We have listened and we have agreed to make changes to put the issues noble Lords have raised beyond doubt. Above all, we will have a robust, effective and operable regime that limits foreign state involvement in UK newspapers while providing the sector with the certainty it needs as it plans for the future.

[Lord Fox (LD)]

My Lords, I thank those noble Lords who made kind comments. It is good to be back and to participate in such an important and serious debate.

Just when I thought I was beginning to get to grips with what the Government are intending, the Minister introduced a whole new layer of ambiguity that is completely opaque. What is and is not permitted is not clear. Reading the SI and listening to the Minister, they are at odds, and this underlines why we should not be approving this measure.

This has thrown up many procedural arguments, which the Government confess to, and worrying aspects regarding the outcome of this measure. These problems and worries render a regret amendment, in my view, inadequate. That is why I wish to test the opinion of the House.