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New Zealand regulator states concerns over proposed Vodafone-Sky deal

New Zealand’s competition regulator, the Commerce Commission, has today (Monday) requested further information regarding the proposed merger between telecommunications company Vodafone NZ and pay-television broadcaster Sky New Zealand.

The Commerce Commission said it was deferring its decision on the deal, which had been due in November, to an unspecified date. Vodafone NZ in June agreed a deal to merge with Sky, a major sports broadcaster in New Zealand.

Under the terms, the integrated telecommunications and media group is set to be 51-per-cent owned by Vodafone following a deal that will allow Sky to acquire all of the shares in the telco for a total purchase price of NZ$3.44bn (€2.23bn/$2.45bn).

The proposed merger has already faced opposition after telco Spark claimed in a submission to the Commerce Commission that the deal would not be in the interests of sports viewers. Public-service broadcaster TVNZ has also suggested that Sky should be forced to sell free-to-air channel Prime if the merger is allowed to go ahead.

In a statement today, the Commerce Commission said: “On the basis of information gathered to date, the Commission 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.

“The Commission is seeking further submissions from Sky and Vodafone on the specific areas of concern identified, including the ability of a merged Sky/Vodafone to use ownership of content – particularly live sports – to make buying Sky on a standalone basis less attractive than buying it in a bundle with Vodafone’s broadband and mobile services.

“The Commission’s concern is that 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 the quality of service beyond what it would be able to without the merger occurring.”

In response, Sky and Vodafone said they are working on providing information to answer the regulator’s concerns. The Commerce Commission has given Sky and Vodafone until November 11 to do this, with other parties then having a week to comment on the responses it receives.