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Sky TV-Vodafone merger blocked

A merger between Sky TV and Vodafone has been blocked by the business watchdog over fears it would stifle competition.

The Commerce Commission has announced it has declined to approve a plan that would have seen the two companies merge into the country's largest telecommunications and media group.

The key issue was the merged entity's ownership of premium sports, such as New Zealand's rugby broadcast rights.

In a statement, commission chair Mark Berry says the watchdog is unable to exclude the possibility the deal would substantially hurt competition.

Spark and 2Degrees had opposed the merger, saying it would hurt consumers by creating a company willing and able to use premium live sports content to stifle competition.

Dr Berry said the merger would have created one a telecommunications and TV company that owned all premium sports content.

Photo: SNPA

"The evidence before us suggests that the potential popularity of the merged entity's offers could result in competitors losing or failing to achieve scale to the point that they would reduce investment or innovation in broadband and mobile markets in the future," he said.

"In particular, we have concerns that this could impact the competiveness of key third players in these markets such as 2degrees and Vocus."

In a statement, Vodafone New Zealand chief Russell Stanners says the company is disappointed with the decision.

The company said it would review the decision and " consider all courses of action".

Under the deal, Sky TV would have bought Vodafone New Zealand for $3.4 billion in cash and shares, leaving Vodafone Europe with a 51 per cent stake in Sky.

– With NZN