Commerce Commission considers Vodafone-Sky TV merger


The Commerce Commission has released details of the main competition issues it will be investigating as part of the proposed merger of Vodafone and SKY TV.

It has told the two companies a decision will be made by November 11th.

The Commerce Commission says it will look at whether the proposed merger is likely to substantially lessen competition. It will also ask if the merger would lead to higher prices or to decreased service compared to what would be on offer if the two companies are not allowed to merge.

The Commission will focus its investigation on whether the merged company will be able to engage in behaviour that either "forecloses rivals or otherwise renders them less able to compete?"

The two companies have already made submissions to the Commerce Commission. They both argued there was no meaningful competitive overlap in their services.

But the Commission wants to know whether two might become direct competitors if they are not allowed to merge.

"We will consider whether, without the merger, Vodafone might start providing content on a stand-alone basis (ie, not in conjunction with SKY) which would compete with one of SKY's offers."

"We will also consider whether, without the merger, SKY might start providing telecommunications services on a stand-alone basis (ie, not in conjunction with Vodafone)."

The Commerce Commission says it will also look at whether the proposed merger would give the new company the ability or incentive to discriminate against other content providers.

For example, would the merged company supply any "must-have" content, like sport, to rivals outside of a bundle with Vodaone?

The Commerce Commission is also looking into the possibility of the merged company discriminating against online entertainment providers like Lightbox or Netflix. The new company could prevent Vodafone customers from accessing such services, by blocking website access or by reducing the quality of this content by deciding not to host rival content providers on Vodafone's network.

The Commission says it will consider submissions from the public. These must be received by July 28th.

On July 6th SKY TV's shareholders voted overwhelmingly in favour of the proposed merger.

Under the proposal, SKY will purchase Vodafone NZ from its parent company Vodafone Europe for $3.44 billion. It will be funded by payment of $1.25 billion in cash, as well as the issue of new SKY Shares at a price of $5.40 per share.

The deal will give Vodafone Europe a 51 percent stake in the merged company.

Final results posted on to the New Zealand Stock Exchange show all three resolutions relating to the proposed merger with Vodafone were passed.

Each resolution was passed 99.6 percent for, with 0.04 percent against.


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