Commerce Commission opens defence in media merger appeal

The Commerce Commission’s lawyers began their defence yesterday against a second appeal by NZME and Stuff over the regulator’s refusal of their attempted merger, arguing that an informed society was worth the $200 million price tag the media companies have put on the rejected deal.

Last May, the Commerce Commission declined to clear or authorise the merger between New Zealand’s two newspaper publishers, arguing it would concentrate too much media influence in one entity.

The subsequent appeal by NZME and Stuff, heard in the High Court in October 2017, was unsuccessful when Jus- tice Robert Dobson and lay member Professor Martin Richardson found that the regulator was entitled to place significant weight on the loss of media plurality if the merger went ahead. 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 will renegotiate the terms of the merger if they successfully appeal due to business changes, with Stuff having agreed to close or sell a third of its New Zealand mastheads in the elapsed time.

Yesterday, the Commission’s lawyer James Farmer QC defended the regulator’s decision, saying its reasoning had not been plucked out of thin air but it was a considered judgement following a year-long consideration.

This followed criticism from the media companies’ lawyers that the Commission did not quantify nor establish the likelihood of the potential downsides, including plurality, if the merger were approved.