Spark New Zealand (“Spark”) said today it welcomes a High Court decision to order a short-term stay in the event the New Zealand Commerce Commission (“Commission”) gives its clearance tomorrow morning to the propo…

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InternetNZ has advised the High Court it supports telecommunications companies’ requests to delay the proposed merger between Vodafone New Zealand and Sky Network Television by 36 hours, in the event this merger is allowed to proceed by the Commerce Commission.

The Commerce Commission is due to release its decision on the merger application on Thursday morning, 23 February.

“If the merger application is approved by the Commerce Commission, Vodafone and Sky will likely complete the merger almost immediately. This will mean that appropriate scrutiny of the Commission’s decision won’t be able to occur,” says InternetNZ Deputy Chief Executive, Andrew Cushen.

InternetNZ has participated throughout this merger application process, raising concerns that the Vodafone-Sky merger may raise network neutrality issues and diminish competition for telephony and pay TV services.

“The Commission was clearly concerned about these matters as well – hence they took the unprecedented step of releasing the Letter of Unresolved Issues late in 2016,” says Cushen.

The telecommunications companies’ applications to the High Court seeks an order to prevent the merger from being completed for 36 hours following the release of the Commission’s decision. This would allow the necessary analysis of the decision, if approval of the merger is granted.

“36 hours is the bare minimum amount of time to allow InternetNZ and other parties the opportunity to assess the Commission’s decision.

“This delay is vital to let us and others check whether the evidence and submissions presented during the merger assessment process have been heard and considered. We need to make sure the merger – if approved – will not be to the detriment of New Zealand Internet, phone and TV users.

“InternetNZ supports the actions to ensure that any merger outcomes will not come at the cost of New Zealanders,” says Cushen.

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Spark New Zealand (Spark), one of the interested parties opposing the clearance application for the proposed merger between Sky Network Television (Sky) and Vodafone NZ (Vodafone) said today it is seeking a Court ruling for a short-term pause in the event the New Zealand Commerce Commission (Commission) clears the merger later this week.

The Commission is due to announce its decision on the proposed merger on Thursday 23 February 2017. Spark is asking the High Court to order that, in the event the Commission gives clearance, this does not take effect until 36 hours following release of detailed reasons underlying the Commission’s decision. Spark is asking the High Court for an urgent hearing on its application, prior to Thursday’s decision.

Spark GM Regulatory Affairs John Wesley-Smith said a short pause would provide some “breathing space” to allow all interested parties to consider the Commission’s reasoning behind a clearance decision, as this would be pivotal in assessing their legal review options.

“This is a question of natural justice: to allow Sky and Vodafone to push ahead with the merger without this breathing space would likely mean the merger would already have been effected, and be difficult to unwind, before opposing parties have had a chance to view the detailed reasoning underlying the Commission’s decision.

“We believe this is a reasonable ask in the context of what’s been a nine-month process already, and is the right thing to do to protect the integrity of the Commission’s process and the legal rights of interested parties. This is a merger proposal with high public interest that has huge implications for consumers with the prospect of less choice and higher prices.

“We expect the Commission’s reasoning will be relatively detailed and fairly complex given the amount of information that has been put before it, so it’s reasonable to have a short period to digest the decision before the merger becomes a fait accompli.

“Given the importance of this decision to the future of broadband, mobile and pay TV markets, it would be a bad outcome if there were grounds to review the decision, yet that became a meaningless exercise because the merger was already firmly in place.”

Wesley-Smith said this does not mean Spark has already decided to take legal action to review in the event the Commission gives its clearance. “That will depend on the reasoning upon which the Commission has based its decision. But it does reflect how seriously we are taking the proposed merger, which we believe will have significant implications for competition.”

He said Spark was among opposing parties who wrote to Sky and Vodafone last week, asking them to voluntarily agree to a pause period following a clearance decision by the Commission. “Sky and Vodafone rejected our requests, so we feel we are left with no choice but to seek a High Court ruling on the matter.”

Wesley-Smith said the legislative framework provides the merging parties far more scope to appeal or review an adverse Commission ruling on a merger proposal, than it does for interested parties in the event of a merger clearance. For instance, if the Commission declined to give clearance to the merger, Sky and Vodafone would have 20 working days in which to lodge an appeal.

Throughout the Commission’s consideration of the Sky/Vodafone proposal, Spark and a large number of other submitters have consistently raised concerns that a merger would significantly lessen competition in the broadband, mobile and pay TV markets – resulting in poorer choice and higher prices for consumers.

“We have particular concerns about Sky’s monopoly in premium sports content, which means New Zealand sports lovers would be the ones to miss out if the merger went ahead in its current form. In today’s digital age, consumers increasingly want and expect to be able to pay for the sports content they want to watch, where and how they want. Viewers have been voting with their wallets away from out-dated content bundle models that force them to pay for unwanted content or service providers,” Wesley-Smith said.

New Zealand’s services sector experienced ongoing expansion during January to start 2017 on a very positive note, according to the BNZ – BusinessNZ Performance of Services Index (PSI).
 
The PSI for January was 59.5.  This was 1.0 point up from December, and the highest value since September 2015 (A PSI reading above 50.0 indicates that the service sector is generally expanding; below 50.0 that it is declining).

BusinessNZ chief executive Kirk Hope said that increased activity in the services sector was across the board.

“While activity/sales (60.8) remained above the 60-point mark, new business/orders reached its highest level since January 2014, which should flow through to overall activity over the coming months”.
 
BNZ Senior Economist Doug Steel said “that the PSI strengthened a bit further in January, which was no mean feat given it was already at very perky levels and continues the acceleration of late last year”. 
 
View PSI Time Series Data

Services Landscape
Swift Service
New Zealand’s Performance of Services Index (PSI) strengthened a bit further in January. That is no mean feat given it was already at very perky levels. Indeed, January’s 59.5 reading has only been surpassed once (September 2015 at 59.7) since 2007.
Read more  → 
 
Confidence and Sales
The ANZ-RM consumer confidence index remained well above average in January. It goes to show that it is not just more people (strong net migration) that are driving sales growth, but confidence among those already here.
Read more  → 
 
Building Off Highs
A strong January PSI offsets some slower signals in other indicators of late such as the PMI, building consents and house sales. Residential building consents fell 7.2% in December, extending the 9.2% decline of November.
Read more  → 
 
House Sales Lower
Indications of further weakening in housing turnover, has coincided with slowing inflation, albeit with considerable variation across categories and regions.
Read more  → 
 
View full BNZ Services Landscape

Activity in New Zealand’s manufacturing sector saw January experience a dip in expansion, according to the BNZ – BusinessNZ Performance of Manufacturing Index (PMI).
 
The seasonally adjusted PMI for January was 51.6 (a PMI reading above 50.0 indicates that manufacturing is generally expanding; below 50.0 that it is declining).  This was 2.6 points lower than December, and the lowest level of expansion since January 2015.  However, the sector has remained in expansion in almost all months since October 2012.

BusinessNZ’s executive director for manufacturing Catherine Beard said that while the decrease in expansion for the first month of 2017 was not ideal, it was clear from comments that a number of factors played a part.
 
“Those who outlined negative comments noted the Xmas/holiday break playing a sizeable role in reduced activity, as did weather conditions.  On the flip side, those who outlined positive comments often did not note anything specific, but more business as usual”.  
 
“Combined, this meant that the proportion of positive comments dropped from 70% in December to 59.5% in January”.

BNZ Senior Economist, Craig Ebert, said “the slowdown in expansion was mainly because of a marked slowdown in its production index, which dampens expectations of a big bounce in the PMI over the short term”.

View PMI Time Series Data

Manufacturing Snapshot    
The PMI
New Zealand’s Performance of Manufacturing Index (PMI) lost more momentum in January. It decelerated to a seasonally adjusted 51.6, from 54.2 in February.
Read more  →
 
Industry Breakdown
One of the first things we thought, when we saw the much-slower PMI of January, was that it might reflect weakness in food processing. We certainly expect rural production to dent GDP over the early part of 2017.
Read more  →
 
Construction
The other point of caution regarding manufacturing is its dependence on the local construction cycle. We say this with some of the building indicators having lost oomph over recent months.
Read more  →
 
Global
And what a purple patch it has been. The NZ PMI has averaged 55.3 over the last 3 years (with not one month of outright contraction – meaning a reading of below 50.0 – throughout). Compare this to the global PMI, which has averaged 51.4 over the same period.
Read more  →

View full BNZ Manufacturing Snapshot