Commerce Commission puts the brakes on Vodafone Sky merger

Commerce Commission wary of merger

The Commerce Commission has raised a number of issues with Vodafone and Sky in regard to their proposed merger, saying it is not satisfied that it would not substantially lessen competition in the telecommunications and pay TV services markets.

UK based Vodafone Group wants to acquire 51 percent of Sky Network Television and 100 percent of Vodafone New Zealand giving it control of a combined Vodafone NZ and Sky.

The Commission has written to Sky and Vodafone seeking further submissions on the issues of concern. These include: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 says its 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,” the Commission says.

However the letter says that despite some third party submissions arguing that the merger would have an adverse effect on the free-to-air TV services or on both the pay TV and free-to-air TV markets it does not consider the proposed merger would be likely to substantially lessen competition in those markets.

The Commission says it has considered a large number of documents and spoken to a wide range of industry participants and that its views as set out in the letter remain preliminary and subject to change as its investigation proceeds and as more information is provided.

The eight-page letter details the Commissions concerns but does not request any specific responses from the parties. It also invites other interested parties to make submissions.

Responses are due by 11 November, the date on which the Commission was originally due to reach a decision. It says the deadline will be extended.

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