NZME and Fairfax apply for authorisation to merge

NZME and Fairfax apply for authorisation to merge NZ operations

The Commerce Commission has received an application from Wilson and Horton Limited (trading as NZME) and Fairfax NZ Limited seeking authorisation to merge their media operations in New Zealand.

Fairfax operates the largest print media network in New Zealand, featuring nine daily and three weekly newspapers, 61 community publications, 10 magazine titles and six websites, including stuff.co.nz. It also has a minority shareholding in social media site Neighbourly.

NZME owns eight daily and two weekly newspapers, 24 community publications, six magazine titles, 10 radio stations and 38 websites, including nzherald.co.nz. As well as websites related to its print and radio offerings, NZME owns a number of individual websites such as Grabone, Shop Green and Adhub.

NZME and Fairfax are also joint venture owners, with TVNZ and MediaWorks, in KPEX Limited. KPEX operates as an ad exchange to sell remnant digital advertising inventory across qualifying publishers' online and mobile websites. Each of the joint venture parties hold a quarter share in KPEX.

The ownership structure for the proposed merged entity has not yet been established. NZME’s parent company, APN, is seeking approval from its shareholders to demerge NZME and have it listed as a separate company on the NZX and ASX.

In the event shareholder approval is gained, it is currently proposed that NZME will acquire Fairfax assets or shares from parent company Fairfax Media Limited (Fairfax Media), for a mix of new shares in NZME and cash. Fairfax Media’s shareholding in the merged entity is expected to be less than 50%.

The Commission will issue a statement of preliminary issues and call for submissions on the authorisation early next month.

A public version of the application is available on the Commission’s website.

Background

Assessing a merger authorisation application
Authorisation applications follow a two-step process under the Commerce Act. The Commission must first assess whether the merger would be likely to substantially lessen competition in a market.

We assess whether a merger is likely to substantially lessen competition in a market by comparing the likely state of competition if the merger proceeds, with the likely state of competition if it does not. If we are satisfied that the merger is not likely to substantially lessen competition, then we would clear the merger at the first step.

If we cannot give clearance due to competition concerns, the second step is to determine whether the merger should be authorised applying the public benefit test. The public benefit test involves a balancing of the public benefits and detriments that would, or would be likely to, result from the merger. We must authorise a merger if we are satisfied that the merger will result in such a benefit to the public that it should be permitted.

An example of an authorisation approved under the public benefit test can be found on our website.

The Commission can only accept structural undertakings, such as the divestment of assets, from parties to resolve competition concerns in a market. We cannot accept behavioural undertakings – where the parties agree they would or would not make specific business decisions post-merger in order to gain approval.

Our Authorisation Guidelines provide further detail on the process we use to determine authorisation applications.

ENDS

© Scoop Media