ComCom has issues with the 2degrees, Vocus merger

The Commerce Commission is calling for public submissions on the likely competitive effects of the proposed merger between 2degrees and Vocus.

The proposed transaction involves a newly incorporated Vocus Group company, Voyage Digital (NZ) Limited, acquiring all of the shares of Orcon Holdings Limited - formerly known as Vocus (New Zealand) Holdings Limited - and then acquiring all of the shares in Two Degrees Group Limited from its shareholders, Trilogy International New Zealand LLC and Tesbrit B.V.

This week, the Commission has published a statement of preliminary issues on the proposed merger, outlining the key competition issues that the Commission considers necessary in deciding whether to grant clearance to the proposed merger.

The Commission says it will give clearance to a proposed merger if it is satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.

The Commission will consider whether the proposed merger would be likely to substantially lessen competition. The closeness of competition, the degree of constraint that Vocus NZ and 2degrees impose upon one another, and that would be lost with the proposed merger, as well as the degree of constraint that existing competitors would impose on the merged entity.

It will also look into how easily rivals can enter or expand, whether the proposed merger is likely to result in a reduced price, quality or innovation in the relevant retail markets, noting that both merger parties have in the past been drivers of such differentiation.

The Commission says it will also be interested in whether the proposed merger is likely to impact competition in any relevant wholesale markets, including on the merged entity's incentives to compete for wholesale customers in the future and the wholesale supply options that would remain available to access seekers (in both fixed-line voice and broadband services, as well as mobile).

Finally, the Commission will consider whether any of the relevant retail or wholesale markets are vulnerable to coordination and whether the proposed merger would change the conditions in the relevant markets so that coordination is more likely, more complete or more sustainable.

The Commission is currently scheduled to decide on the application by 15 March 2022. However, this date may be extended as the investigation progresses.

Interested parties can provide comments on the likely competitive effects of the proposed merger, with submissions open until 15 February 2022. Submissions can be sent by email to registrar@comcom.govt.nz with the reference "Vocus/2degrees" in the subject line.