The Australian Competition and Consumer Commission has sought a Federal Court injunction to block the proposed merger of Foxtel/Australis Media on the grounds that it is likely to damage competition in the local telephony market and in the pay TV market.

The ACCC alleges that the merger will reduce competition in the local telephony market by weakening the capacity of Optus to compete in that market with combined pay TV and telephony services.

The ACCC alleges that the merger will give a combined Foxtel/Australis Media business a high market share, a factor which is of especial importance in the pay TV industry, particularly with respect to the ability to obtain and retain programming.

Foxtel and Australis Media have indicated that they intend to proceed with the merger, in the absence of the ACCC seeking an injunction. The relevant shareholders meeting for Australis Media is to be held in early November and notices for the meeting were going to be sent out soon.

The ACCC raised its competition concerns with Foxtel, Telstra and Australis Media and sought undertakings from them that they would not take further steps to complete the merger without advance notice to the ACCC. The parties would not give the undertakings requested.

Accordingly the ACCC has taken court action. A directions hearing will be held at the Federal Court, Sydney on Thursday (October 16) at 9.30am.

NB: Section 50 of the Trade Practices Act prohibits mergers or acquisitions which have the effect or likely effect of substantially lessening competition in a substantial market. Section 4G of the Act states that the term 'substantially lessen competition' includes 'preventing or hindering competition'.

For further information about this media release: Professor Allan Fels, Chairman, (03) 9290 1812 Ms Lin Enright, Director, Public Relations, (02) 6264 2808