All you need to know about the Fairfax-NZME merger appeal

Tuesday, 19 December 2017

The media merger has again run into a big red light.

The High Court has rejected an appeal by media companies Fairfax NZ and NZME over the Commerce Commission's rejection of their merger bid.

In a 100-page decision, Justice Robert Dobson accepted most of the watchdog's reasoning for blocking the merger – but not all of it.

WHAT THE COURT CONCLUDED

It agreed with ComCom that the media companies could not prove a 'substantial lessening in competition' (SLC) was not likely for online national news, Sunday papers, and for advertising and readers where their community papers compete.

The court disagreed with the commission on whether the media companies could introduce a paywall if they merged, finding a paywall was unlikely.

It also disagreed with ComCom over the advertising market for Sunday papers, saying an SLC was not likely in that market.

The court agreed the Commerce Commission was entitled to weigh up whether the merger would result in a loss of 'media plurality', meaning fewer voices in the media. Media plurality was central to the commission's decision to reject the merger bid.

It agreed with ComCom that the benefits of the merger to the public did not outweigh the downsides.

THE SIDE ISSUE

There was some squabbling over the conference about the way in which the Commerce Commission had gone about seeking advice from independent experts, and the court mildly criticised the instructions it had given to one consultant it wanted a report from.

But, overall, the court backed the commission's handling of the merger investigation.

It also said the watchdog was entitled to costs.

'I leave the parties to reflect, and hopefully confer, on an appropriate outcome on costs,' Justice Dobson said.

WHAT NEXT?

Neither Fairfax nor NZME havesaid yet whether they would appeal the High Court decision.

But both companies have said they would move ahead with their own independent strategies to deal with the downturn in the traditional advertising market that prompted them to look at merging in the first place.