The Commerce Commission shouldn't have considered reduced media plurality in deciding to reject the merger of Stuff and NZME, the media companies' lawyer told the court.
In the second day of the appeal at the Wellington High Court, which has been set down for 10 days, David Goddard QC said the commission's role is to assess the impact of transactions on markets, and its concern about reduced diversity in viewpoints - or plurality - in a merged entity is not within its role.
When the regulator published its decision in May, its primary concern was that the deal would reduce the quality of news produced and the diversity of voices available to the public. At the time, chair Mark Berry said the regulator didn't think the merged entity's competitors would be able to stop it from making cost-cutting decisions which reduced quality and plurality, and didn't think promises to maintain current levels of plurality would be a sufficient safeguard.
Referencing the recent media storm about a potential potato chip shortage, Goddard said the Commerce Commission wouldn't be entitled to prevent the merger of two potato chip manufacturers because it was concerned that merger would create efficiencies which could lead New Zealanders to eat more chips.
"We're interested in what people are willing to pay for, the economic welfare implications of the transactional activity and the means of production, not the downstream health consequences years later for New Zealanders," Goddard said. "In my submission, plurality is a bit like asking whether GMOs are good or bad, or asking about efficient production of potato chips, those are not matters the commission has expertise in."
Goddard spent much of the morning taking Justice Robert Dobson and Professor Martin Richardson through literature on attention economics and pricing.
The Commerce Commission will likely begin its arguments on Thursday or Friday. The media companies have also filed a second appeal, which concerns the process used by the regulator before it rejected the merger. Goddard's arguments on that will either follow straight after the first appeal, or arguments from both sides on the second appeal will be heard separately after the conclusion of the commission's arguments on the first appeal.
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