1492055431802 - Competition watchdog provides detailed reasons for blocking Sky merger

Competition watchdog provides detailed reasons for blocking Sky merger

The ball is back in the court of Sky TV and Vodafone to decide what to do about the Commerce Commission’s decision to refuse clearance for their proposed merger.

The competition watchdog released the detailed reasons for its ruling on Thursday, after declining clearance for the merger in February. 

Its key objection was already known and centred on concerns the merged firm could have used Sky’s grip over premium sports broadcast rights to gain an unfair advantage in the broadband and mobile markets.

But Sky TV and Vodafone had said they would wait for the detailed reasoning to be released before deciding on their next move, having previously lodged a High Court appeal against the commission’s ruling in order to keep their options open.

READ MORE: * Sky and Vodafone may be considering ‘high risk’ option to revive merger * Overturning kibosh on Sky/Vodafone merger would be ‘a challenge’ * Sky TV boss says appealing merger ruling would be like having ‘root canal work’

Executives and lawyers from both companies will have the opportunity to pore over the 145-page document over the Easter break.

Competition lawyers have expressed doubt they are likely to find easy grounds for an appeal.

However, there is also speculation that Vodafone harbours hopes of pressing ahead with the merger – with or without further input from the commission – depending on its reading of the full final determination and any deals Sky could strike with Vodafone’s rivals.

Commerce Commission chairman Mark Berry has also noted the two companies could formally reapply for clearance to merge. 

Vodafone spokeswoman Elissa Downey said it was “reviewing the decision document and considering its options”. Sky has been contacted for comment.

Blessing from the commission is not legally required for Sky and Vodafone to merge.

But one top competition lawyer said the companies would be taking an “enormous risk” if they pressed ahead with the merger without seeking clearance, given the risks of subsequent litigation.

That was unless they could obtain unanimous support from internet providers that have opposed the deal.

Spark chief executive Simon Moutter said in a newsletter to shareholders that it would welcome the opportunity to “bundle modern, on-demand versions of Sky’s core sporting content with its broadband and mobile packages, if Sky was willing to create a vibrant wholesale market for its content”.

Such a deal could potentially clear one obstacle to reviving the merger.

But Mark Callander, chief executive of Slingshot and Orcon-owner Vocus, the country’s third-largest internet provider, said this week that a content deal with Sky was not a high priority for Vocus and its objections to the merger had not changed.

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