Stance on NZME/Fairfax merger bound to be highly contentious

8 November 2016

Media Release

Simpson Grierson says Commerce Commission's stance on NZME/Fairfax merger bound to be highly contentious

The Commerce Commission's draft determination to decline to authorise the proposed NZME/Fairfax merger raises important issues for the future of a news industry struggling to deal with digital disruption, and for New Zealanders who rely on that industry to provide quality journalism, Partner Anne Callinan says.

The 200-page draft decision raises questions about the extent to which the Commerce Commission can legitimately base its decision on unquantifiable detriments to the public, and if so, whether it has correctly predicted the detriments of the merger to New Zealand society, Callinan says.

NZME and Fairfax had taken the view that these "detriments" were not something the Commission, as a competition authority, could factor in and that the Commission was straying into public policy issues for the Government to address. The decision calls into question the line between a competition analysis and a public policy analysis.

"Obviously a draft determination that does not accept the authorisation is a significant setback, but it is not irreversible."

There have only been a handful of merger authorisations in New Zealand - most notably the failed Air New Zealand/Qantas merger application, Callinan says.

"More often than not the Commission has stuck to its draft determination, with one exception where it did change its mind from the draft decision and allowed the merger of two North Island ski fields."

The Commission has called for submissions and will hold a three day conference to hear submissions and ask questions between 6 and 8 December. It will then write its final determination. If NZME and Fairfax do not obtain the authorisation, they can appeal the Commission's decision to the High Court. A case of that complexity would likely take at least six months to be heard and decided.

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