Using a personal example, Davies told the committee, which is currently investigating press standards, privacy and libel, that a national newspaper once tried to print a sexual smear about his wife, even though it was untrue.
Davies said the reporter put the allegation to him, which he then denied. The piece was never published, he said.
"Part of what helped me was that I've never had a wife," Davies said. The editor had earlier said 'I'm going to run it anyway, with your denial,' according to Davies.
This, he said, was an example of the way newspapers think it is acceptable to run stories as long as they have got the other side of the story.
Davies has frequently argued in the past that the public interest defence required for successful defamation cases, encourages this type of behaviour.
Also addressing the committee, Roy Greenslade, journalism professor at City University and blogger at the Guardian, said while he had sympathies for Formula One president Max Mosley over the way he was treated by News of the World in 2008, he did not want to see a prescriptive legal code which would insist on prior notification before running a story, as Mosley has suggested.
It is 'iniquitous' to him that 'you can't make allegations about people because they will respond by going to law', Greenslade said.
While most responsible journalists would 'want to' approach the other party for a response for the story, 'there are occasions where you wouldn't', he added later in the hearing.
There is a 'real risk' of sources collapsing if stories were taken to the subject concerned too quickly, said Davies.
"Honest journalists need the option to do prior notification or not. If you tie us into a law (...) you'll lose important journalism," he added.
Greenslade, however, conceded that journalists sometimes use prior notification as their own 'blackmail' technique, referring to the scandal involving television presenter Frank Bough in the late 1980s. Greenslade said Bough made a 'terrible mistake' by agreeing to speak to newspapers prior to publication of personal allegations - worsening the story.
Referring to his own position as a media reporter and commentator, Greenslade said he had 'plenty of examples when journalists are 'prime users' of laws they claim to dislike. For example, the Barclay Brothers have previously threatened legal action against him and the News of the World lawyer has recently been in communication, he said.
Some of his own stories remained unreported because of current UK media laws, he added.
The committee also asked the journalists about the efficiency of the Press Complaints Commission (PCC) and Daily Mail editor Paul Dacre's role within it; the increased 'celebrity' content of UK news; differences between UK and US press regulation; the limitations of conditional fee agreements (CFAs); and what they believe constitutes a 'public figure' and 'public interest'.
The committee, which has already heard evidence from several groups of witnesses [example links below], will hear evidence from Daily Mail editor, Paul Dacre, on Thursday.
- 'High costs allow 'rich people' to exploit legal system, say media laywers (Journalism.co.uk)
- 'PCC chairman Sir Christopher Meyer criticises media law firms' (MediaGuardian)
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