Fairfax & NZME face difficult decision

Simpson Grierson says Fairfax & NZME face difficult decision whether to appeal Commerce Commission determination

While the Commission's determination to decline clearance and authorisation of the merger is of little surprise, seeing as it reflected the draft determination released last year, the question remains whether Fairfax/NZME will appeal that determination.

Competition partners Anne Callinan and James Craig say the Commission's finding that the merger would substantially lessen competition in relevant markets is unlikely to be the main angle of an appeal.

"While Fairfax/NZME will no doubt be unhappy that the Commission has rejected their confidential submissions as to the likely future for each of their businesses without the merger, this is a factual determination by the Commission, which is typically harder to challenge in an appeal."

Rather, Callinan and Craig say the more productive line for an appeal will probably be regarding whether the public benefits of the merger outweigh the detriments.

The Commission has accepted that there will be quantified benefits of between NZ$40 – $200m over the next five years from the merger. However they have determined that these are outweighed by unquantified detriments relating to the likely loss of media plurality and quality.

"There is a live legal issue as to whether loss of plurality in particular can be considered as a detriment and, even if it can, the extent of that detriment. We would expect this to be a key focus of any appeal."

Ultimately, the chances of success on an appeal aren't clear cut, Simpson Grierson say, and there's also the major issue of the time and cost that it will take to bring an appeal to the High Court.

"Even if Fairfax / NZME were successful there, the Commission could appeal that decision to the Court of Appeal."

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