The NZME/Fairfax Court of Appeal judgement is out and contained few surprises.
The Court had been widely anticipated to rebuff the appeal against the Commerce Commission’s refusal to authorise the proposed merger of NZME (the Herald, radio stations, and a herd of other North Island media businesses) and Fairfax (DomPost, Press, S-ST, herd of other media things nationwide). So it did. Rather, the interest was always going to be in what it said about the Commerce Act and how it is supposed to operate.
In particular, was the Commission allowed to count non-economic things in the balancing of benefits and detriments that goes on in a merger authorisation? In this case, the big non-economic detriment was the social loss of media plurality (a very large share of the take on the news would be in one pair of hands).
There was also a likely degradation of the quality of journalism (due to the merged entity laying off journalists) which was also treated as a non-economic detriment. That always seemed odd to me, as a loss of product quality is easily accommodated within the usual economic framework. But never mind: what did the Court say?
It said, count all benefits, count all detriments, whether occurring in the markets affected or not, and whether economic or not. Completely sensible. Key bits (footnotes omitted here and later):
 … The High Court held that the Commission has jurisdiction to consider a loss of plurality resulting from the transaction. It accepted that out of market considerations may seldom arise and the Commission may be susceptible to challenge on the merits if it takes them into account, but as a matter of construction Parliament cannot have intended to exclude such considerations where a proposed transaction is likely to cause them. We agree generally with these conclusions …
 … Section 3A further presumes that efficiency gains may benefit the public and prescribes that regard must be had to them when assessing public benefit. But as a matter of construction the Act treats efficiency as a subset of public benefit; put another way, efficiency is a mandatory consideration but others are not excluded. To paraphrase AMPS-A (HC), efficiency matters but it does not exhaust society’s interest in the transaction …
 … the Act is not exclusively concerned with efficiency but rather allows it to be balanced alongside other public benefits that may include anything of importance to the community as a whole. Nothing in the legislation requires that public detriments be defined less comprehensively. The identification and weighting of public benefits, including efficiency gains, and detriments is left to the Commission’s judgement.
Perhaps sarcastically, along the way the Court said at  that the Commission must have been doing it wrong all these years when it had already been counting a whole bunch of non-economic consequences – “reduced pollution, health benefits of breastfeeding, safer handling of hazardous substances, reduced stigma for psychiatric patients, and social effects of plant closures”.
There was one interesting thing in the part of the judgement dealing with balancing benefits and detriments. While it may be tempting, for the Commission or for the merger parties, to chuck in low probability outcomes with high impact – “cure for cancer”, “world peace”, “Armageddon”, you get the idea – you can’t do that. As the Appeal Court said (rapping the High Court’s knuckles, though otherwise affirming where the High Court had got to):
 In our opinion the High Court erred to the extent that it took into account what it considered a remote risk that a single owner would exploit the merged entity for political purposes. We agree that even a remote risk of this kind is a matter of public concern. Post-transaction, NZME’s substantial presence in relevant markets would create a vulnerability that ought to worry policymakers. But unless the risk is thought “likely” it should not enter the balance …
Had the Commission and the High Court got the facts wrong? No.
 We consider that quality and plurality detriments are very likely to result from the transaction. We have examined quality effects first …We agree with the High Court that quality detriments are very likely and substantial. We consider that they are sufficient in themselves to outweigh the transaction’s benefits.
 Additional plurality losses are also very likely and substantial. We agree with the High Court and the Commission that plurality is a characteristic of media markets that is vitally important to the community. We also agree with the High Court that the loss of plurality attributable to the transaction would very likely be irreparable …
 In the result, we find that detriments clearly outweigh benefits, and not by a small margin. It follows that authorisation was properly declined
My overall take? The jurisprudence has landed in a good place. If a merger has a mix of good and bad stuff, it may get messy: as the judgement says at , “We accept that non-economic detriments may complicate merger analysis and introduce an additional element of unpredictability, which is undesirable”. But that’s the way it is: “Some measure of uncertainty is inherent in the legislative decision to permit authorisation on widely-defined public benefit grounds … Parliament made efficiencies a mandatory consideration but it did not exclude others or say anything about the weight to be assigned to them”.
So count them all (excluding the unlikely ones) best you can, and balance them. That aligns economics, the law, and common sense. Not a bad day’s work by the Court at all.