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Sky and Vodafone merger hits a hitch

NZ Newswire logoNZ Newswire 30/10/2016

A proposed merger between Vodafone and Sky could seriously hurt competition in both the telecommunications and pay TV industries, the competition watchdog says.

The Commerce Commission has sent the companies a letter outlining concerns it has over their potential merger and is now awaiting their reply.

The commission says it is particularly worried ownership of rights to sports events would mean the merged company would be able to make it less attractive to subscribe to just Sky without signing up to Vodafone's broadband service.

"The commission's concern is that while consumers may initially benefit from lower prices, rival broadband and mobile providers could lose or fail to achieve scale and become less competitively effective," it said.

"Over time this could reduce competition in these markets and potentially enable the merged entity to raise prices or lower the quality of service beyond what it would be able to without the merger occurring."

The companies now have until mid-November to make their submissions before the commission decides on whether to clear the merger.

Under the proposal, Vodafone Europe would buy 51 per cent of Sky's shares, and Sky would get all of Vodafone New Zealand's shares and assets - creating one company controlled by Vodafone.

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