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'Live legal issue' in merge call: lawyers

NZ Newswire logoNZ Newswire 3/05/2017 Pattrick Smellie

The new NZME building in Graham St. © Fiona Goodall/Getty Images The new NZME building in Graham St. NZME and Fairfax New Zealand are most likely to focus any appeal against the Commerce Commission's rejection of their proposed merger on the claim that the damage to quality of news would be greater than commercial benefits, Auckland law firm Simpson Grierson says.

"While Fairfax/NZME will no doubt be unhappy that the commission has rejected their confidential submissions as to the likely future for each of their businesses without the merger, this is a factual determination by the commission, which is typically harder to challenge in an appeal," partners Anne Callinan and James Craig said in a statement.

"The more productive line for an appeal will probably be regarding whether the public benefits of the merger outweigh the detriments."

The commission said in its decision on Wednesday morning that NZME and Fairfax had failed "by a significant margin" to convince it that the commercial gains of a merger were greater than the downside of reduced media "plurality".

It accepted there would be financial gains of between $40 million and $200 million from the deal for the companies over five years, while accepting the challenging circumstances that media companies face.

But the watchdog found the companies' claims of commitment to ongoing plurality, codes of ethics and editorially competitive ethos were not undertakings it could rely on.

"There is a live legal issue as to whether loss of plurality in particular can be considered as a detriment and, even if it can, the extent of that detriment. We would expect this to be a key focus of any appeal," Ms Callinan and Mr Craig said.

Simpson Grierson did not represent any of the parties in the hearings.

NZME and Fairfax have 20 days to appeal the decision to the High Court, and the issue could go as far as the Court of Appeal.

However, Ms Callinan said a challenge to the whole decision risked both very long hearings and associated high legal costs in a merger bid that has already taken the regulator nearly a year to rule on.

"If Fairfax felt it could narrow the issue on appeal, they may consider that more manageable."

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