Transtasman publisher John Fairfax Holdings' planned $700 million acquisition of internet auction site Trade Me may hit a roadblock at the New Zealand competition watchdog.
Fairfax on Monday announced a conditional agreement to buy Trade Me, which accounts for more than 60% of New Zealand's web traffic.
An additional $50 million would be paid if the company meets certain earnings targets over the next two years and Sam Morgan would continue to run the business which he founded in 1999.
Commerce Commission chair Paula Rebstock has indicated at a mergers and acquisitions conference in Auckland that internet and newspaper advertising might now be seen as part of the same market which could make the deal anti-competitive.
"In the past, the commission has defined separate print and online media markets but acknowledged they are complementary," Rebstock said.
But the commission has reconsidered its view after Fairfax's acquisition of Rodney Times publications, she said
"In the recent Fairfax/Times Media Group acquisition, the commission, while defining a distinct print media advertising market, acknowledged that the extent to which it faced competition from online advertising was increasing."
The commission intends to consider these issues further in assessing the competitive impact of the proposed acquisition of Trade me by Fairfax, she said.
Analysts have been stunned by the price Fairfax is prepared to pay for Trade Me and see it as an attempt by Fairfax to boost its online advertising business.