The Commerce Commission has agreed an extension with NZME and Fairfax on their application seeking authorisation to merge their New Zealand media operations and will now make its final decision by 15 March 2017.

NZME and Fairfax lodged their application on 27 May 2016 and the Commission has received a large number of submissions from interested parties. The proposed merger is complex and involves two-sided markets – advertisers on one side and consumers (readers) on the other. The Commission is continuing to assess the effects of the proposed merger on areas such as the provision of national, regional and local news content and information, including the impact on the quality, accuracy and range of the news media in New Zealand. In addition, the Commission is assessing whether the proposed merger would enable the parties to increase prices to advertisers and consumers.

As part of the standard authorisation process the Commission intends to release a Draft Determination by early November. This will set out the Commission’s preliminary view on whether the proposed merger would be likely to result in a substantial lessening of competition as well as balancing the public benefits and detriments that it may bring about. Following the release of the Draft Determination, the Commission will seek further submissions from interested parties.

The decision-making timeframe allows for a public conference to be held in December should it be needed. A conference would be an opportunity for the Commission to test the views of NZME and Fairfax and interested parties on the issues raised in the Draft Determination. The Commission would then consider all submissions and publish its final decision on or before 15 March 2017.

The Commission cannot comment further on the application at this time.

Background

Assessing a merger authorisation application

Authorisation applications follow a two-step process under the Commerce Act. The Commission must first assess whether the merger would be likely to substantially lessen competition in a market.

We assess whether a merger is likely to substantially lessen competition in a market by comparing the likely state of competition if the merger proceeds, with the likely state of competition if it does not. If we are satisfied that the merger is not likely to substantially lessen competition, then we would clear the merger at the first step.

If we cannot give clearance due to competition concerns, the second step is to determine whether the merger should be authorised applying the public benefit test. The public benefit test involves a balancing of the public benefits and detriments that would, or would be likely to, result from the merger. We must authorise a merger if we are satisfied that the merger will result in such a benefit to the public that it should be permitted.

An example of an authorisation approved under the public benefit test is the Cavalier Wool Holdings/New Zealand Wool Services International authorisation. Read more in the media release.

The Commission can only accept structural undertakings, such as the divestment of assets, from parties to resolve competition concerns in a market. We cannot accept behavioural undertakings – where the parties agree they would or would not make specific business decisions post-merger in order to gain approval.

Our Authorisation Guidelines provide further detail on the process we use to determine authorisation applications.