Commission exceeded its remit in rejecting merger, say media firms

Lawyers for NZME and Stuff are relitigating the attempted merger of New Zealand’s dominant newspaper publishers in the Court of Appeal, arguing that the Commerce Commission overstepped its authority when it refused the tie-up.

In May last year, the commission declined to authorise the merger, arguing it would concentrate too much media influence in one entity.

The subsequent appeal by NZME, which owns the New Zealand Herald, and Stuff, heard in the High Court in October 2017, was unsuccessful when Justice Robert Dobson and lay member Professor Martin Richardson found that the regulator was entitled to place significant weight on the loss of media plurality.

The current appeal is focused on the regulator declining to authorise the merger “against a backdrop of very large quantified net benefits”, which the High Court found to be between $133 million and $209m, the media companies’ lawyer David Goddard, QC, said yesterday.

NZX-listed NZME and Stuff, the New Zealand arm of ASX-listed Fairfax Media, applied to amalgamate in 2015, arguing the merged entity would be more able to survive the global competition for local advertising dollars from online search and social media giants such as Google and Facebook. In March, the publishers said they would renegotiate the terms of the merger if their appeal succeeded, with Stuff having agreed to close or sell a third of its New Zealand mastheads.

Yesterday, Goddard said the Commerce Commission should “stick to its knitting” and its role was to regulate business, not the media, so it shouldn’t have made a decision based on whether there would be a loss of diverse media viewpoints.

“It’s not the commission’s job to say, ‘Well, having identified an opportunity to advance New Zealand’s available resources by over $100m, we think it would be good for New Zealand to spend that on some more plurality.’ That’s an essentially political choice of the kind which should be made by elected governments and by Parliament.”

The commission was attempting

That’s an essentially political choice of the kind which should be made by elected governments and by Parliaments. David Goddard, QC

to use a hammer to solve a complex problem, Goddard said, and should not have considered the issue of plurality as it was not a public benefit under the legislation, but a political goal. Beyond that, the regulator has an obligation to determine the likelihood of possible detriments and did not in this case, he said.

Goddard said a merger wouldn’t lead to worse coverage of important news, as media organisations would continue to cover important news as that attracted attention and, consequently, advertising dollars, but would mean less “lifestyle” coverage.

The case is set down for four days.