New Zealand’s competition regulator highlighted potential competition issues related to a move by Spark’s independent tower unit Connexa to acquire passive infrastructure from rival 2degrees, following an initial investigation.

The Commerce Commission emphasised its concerns are not a final decision as it outlined matters its considers important in its mullings.

Based on the current evidence, the commission stated it is not satisfied the proposed acquisition will not substantially lessen competition in one or more relevant markets, noting the country would only have two large-scale national suppliers of passive infrastructure service rather than the current three.

“We are considering whether this reduction of suppliers could substantially lessen competition due to unilateral or coordinated effects”.

It added consolidation could reduce competition to supply future sites and the entry of new players, and increase the “likelihood of coordination between suppliers of passive infrastructure services”.

The regulator also noted a potential concern of vertical effects on 2degrees, prompting it to assess if “Spark would have the ability and incentive to influence Connexa to harm 2degrees, by raising its costs, reducing the quality of services provided by Connexa, delaying site builds or by any other means”.

The agency called for submissions on the deal by 14 April.