Appeal court explains block on Stuff, NZME merger

The Court of Appeal has released its reasons for upholding a block on the proposed merger of media firms NZME and Stuff Ltd.

The ruling upholds the right of the Commerce Commission to block mergers on any public interest grounds, regardless of the economic benefits – so long as it has first identified a likely competition problem.

The court had earlier announced on Tuesday that it had decided to affirm a decision by the Commerce Commission and the High Court that the merger was not in the long-term interests of consumers.

Judges Stephen Kos, Forrie Miller and Raynor Asher said the merger would have had a ‘‘substantial’’ effect on plurality.

They said: ‘‘The transaction would reduce to four the number of major news providers, and the merged entity would employ many more journalists and editorial staff than Television New Zealand, MediaWorks and Radio New Zealand combined. Even if its owners are politically agnostic, the merged firm is more likely to follow a uniform approach in its various publications.’’

The Court of Appeal expressed doubt over an estimate cited by NZME and Stuff that only about of 13 per cent of the combined firm’s workforce would lose their jobs if the merger went ahead.

It estimated the financial benefits of the merger would have totalled between $130 million and $200m to the country over five years, possibly offset by up to $55m to $65m of ‘‘detriment’’ from the prospect of online news being put behind a paywall.

But its ruling on the commission’s powers meant the regulator could attach more weight to the loss of plurality.

The companies can seek leave to appeal to the Supreme Court, but that right is not automatic.

Leave is only granted if the Supreme Court is satisfied that it is necessary in the interests of justice – for example because it is a matter of ‘‘general commercial significance’’.