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Commerce Commission concerned about damaging competition; postpones deal decision.
New Zealand’s Commerce Commission this week said it is worried about the potential damage that the merger between Vodafone and Sky could inflict on competition.
In a statement on Monday, the competition watchdog said it has sent a letter of unresolved issues to the pair, stating that it is "currently not satisfied that the proposed merger will not have, or would not be likely to have, the effect of substantially lessening competition in the telecommunications and pay TV services markets."
Vodafone New Zealand and Sky Network Television announced their NZ$43.44 billion tie-up in June; each company submitted a merger clearance application later that same month. At the time, both insisted that the residential broadband and pay TV markets would remain unharmed because Vodafone and Sky do not currently compete with one another.
Nonetheless, in its letter on Monday, the Commerce Commission said that the merged entity could use ownership of content to make buying Sky on a standalone basis less attractive than buying it as part of a bundle with Vodafone’s broadband and mobile services.
"While consumers may initially benefit from lower prices, rival broadband and mobile providers could lose or fail to achieve scale and become less competitively effective. Over time, this could reduce competition in these markets and potentially enable the merged entity to raise prices or lower quality of service beyond what it would be able to do without the merger occurring," the watchdog warned.
The Commerce Commission was due to issue a decision on the merger by 11 November. However, in light of this week’s developments, the deadline has been pushed back.
"The Commission is talking to the applicants about an extension to the decision date and will update the project timeline on its Website when a new decision date has been confirmed," the regulator said.
