NZ: SKY, Vodafone end merger agreement

New Zealand pay-TV operator Sky Network Television and telco Vodafone Europe B.V.1, a wholly owned subsidiary of Vodafone Group Plc, have now decided to terminate the sale and purchase agreement in relation to the proposed merger of SKY and Vodafone New Zealand.

The parties have also decided to withdraw the appeal of the Commerce Commission decision regarding the proposed merger.

In a Statement, SKY and Vodafone New Zealand said they would continue to work together to strengthen their commercial relationship for the benefit of the customers and the shareholders of their respective organisations.

In June 2016, the pair announced their plan to merge, a move they said would create a leading integrated telecommunications and media group in New Zealand, with the combined group having the ability to offer New Zealand’s best entertainment content across all platforms and devices in a rapidly evolving media and telecommunications market.

In October 2106, however, New Zealand’s Commerce Commission sent a Letter of Unresolved Issues to the pair in relation to their proposed merger, suggesting it was not satisfied that the proposed merger will not have, or would not be likely to have, the effect of substantially lessening competition in the telecommunications and pay-TV services markets.

It sought further submissions from Sky and Vodafone on the specific areas of concern identified, including 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.

On February 23rd 2017, the Commerce Commission said it had declined to grant clearance for the proposed merger, suggesting that to clear the merger it would need to have been satisfied that it was unlikely to substantially lessen competition in any relevant market. ”Given we are not satisfied that we can say that competition is unlikely to be substantially lessened by the proposed merger, we must decline clearance,” it concluded.

The pair appealed that decision on March 22nd, subsequently amending it on May 18th. That appeal has now been withdrawn.

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