Wednesday, 29 March 2017

Spark lobbies court to delay Vodafone/Sky NZ deal

By Nick Wood, Total Telecom
Monday 20 February 17

Incumbent asks for 36 hours of 'breathing space' in the event that regulator clears NZ$3.44 billion merger.

Spark New Zealand on Monday petitioned the country's High Court to delay Vodafone's planned merger with Sky Network Television in the event that the Commerce Commission approves the deal. The Commission is due to decide whether to green-light the NZ$3.44 billion (€2.33 billion) transaction on Thursday. Should the deal get the go-ahead, Spark – which is opposed to the tie…

Spark New Zealand on Monday petitioned the country's High Court to delay Vodafone's planned merger with Sky Network Television in the event that the Commerce Commission approves the deal.

The Commission is due to decide whether to green-light the NZ$3.44 billion (€2.33 billion) transaction on Thursday.

Should the deal get the go-ahead, Spark – which is opposed to the tie-up – wants a 36-hour delay to the Commission's decision becoming effective. The incumbent was among several companies that wrote to Vodafone and Sky last week asking them to voluntarily pause the deal.

"Sky and Vodafone rejected our requests, so we feel we are left with no choice but to seek a High Court ruling on the matter," said John Wesley-Smith, general manager of regulatory affairs at Spark.

Delaying the deal "is a question of natural justice," he claimed. "To allow Sky and Vodafone to push ahead with the merger without this breathing space would likely mean the merger would already have been effected, and be difficult to unwind, before opposing parties have had a chance to view the detailed reasoning underlying the Commission's decision."

He denied that Spark has already decided to take legal action should the Commission approve the deal.

"That will depend on the reasoning upon which the Commission has based its decision. But it does reflect how seriously we are taking the proposed merger, which we believe will have significant implications for competition," Wesley-Smith said.

Sky and Vodafone New Zealand agreed to merge in June 2016. Each company applied for merger clearance later that same month; both parties insisted that the residential broadband and pay TV markets would remain unharmed because Vodafone and Sky do not already compete with one another.

The Commerce Commission was initially due to issue a decision by 11 November. However, it was pushed back until 23 February, reflecting lingering concerns about the implications for competition, and the large volume of submissions relating to the deal from multiple third parties.

Spark claims that the merger would harm competition in the broadband, mobile and pay TV markets, leading to less choice and higher prices for consumers.

"We have particular concerns about Sky's monopoly in premium sports content, which means New Zealand sports lovers would be the ones to miss out if the merger went ahead in its current form," said Wesley-Smith.

"We expect the Commission's reasoning will be relatively detailed and fairly complex given the amount of information that has been put before it, so it's reasonable to have a short period to digest the decision before the merger becomes a fait accompli," he said. "Given the importance of this decision to the future of broadband, mobile and pay TV markets, it would be a bad outcome if there were grounds to review the decision, yet that became a meaningless exercise because the merger was already firmly in place."

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