News
Commerce Commission to look at whether tie-up will make life difficult for rival players, will rule on deal by 11 November or sooner.
New Zealand’s Commerce Commission is opening an investigation into the prospective competition issues arising from Vodafone and Sky’s merger plan, with a particular focus on whether the merged entity would be able to push out rivals or make them less able to compete.
Vodafone New Zealand and Sky Network Television announced their NZ$3.44 billion tie-up six weeks ago and submitted separate merger clearance applications to the Commerce Commission in late June; both insisted that the transaction will not lessen competition in the residential broadband or pay TV sectors, where they do not currently compete.
The regulator seems inclined to agree, to a certain extent.
The Commerce Commission said it will look at the unilateral effects of the deal – whether the merged entity will be able to raise prices or reduce quality – but notes that this is an unlikely outcome, given that the firms operate in different markets.
It "appears to be the case," that there is no meaningful competitive overlap between the two operators at present, it said.
However, "we will consider whether the parties would become more meaningful competitors without the merger," it added, noting that the investigation will consider whether, in absence of the merger, Vodafone might start providing content on a standalone basis to compete with Sky, or whether Sky could launch telecoms services, for example.
"If such expansion would be likely without the merger, then any potential competitive constraint from this would be lost as a result of the proposed merger," the regulator said. "This could result in higher prices or decreased service levels relative to the ‘without the merger’ scenario."
The Commerce Commission explained that the main focus of its investigation will be on "the vertical and conglomerate effects" of the merger; that is, it will consider whether the combined business would make it more difficult for rivals to compete effectively.
The commission presented these points in its Statement of Preliminary Issues late last week. Interested parties have until 28 July to submit comments on the statement.
The regulator will make a decision in the case by 11 November, or possibly sooner, if its investigation does not uncover any major issues.
