New Zealand’s competition watchdog wants more information on Vodafone’s proposed merger with Sky TV, as it expressed concern that the deal could lessen competition in the country’s telecom and pay-TV markets.

The Commerce Commission, which was due to rule on the proposed NZD1.25 billion merger in November, deferred its decision to an unspecified date, as it asked both companies to make further submissions on certain areas of concern.

This includes “the ability of a merged Sky/Vodafone to use ownership of content – particularly live sports – to make buying Sky on a standalone basis less attractive than buying it in a bundle with Vodafone’s broadband and mobile services”.

“The commission’s concerns is that while consumers may initially benefit from lower prices, rival broadband and mobile providers could lose or fail to achieve scale and become less competitively effective,” said the regulator.

It added that this could reduce competition in these markets, and potentially enable the merged entity to raise prices or lower the quality of service, beyond what it would be able to do “without the merger occurring”.

After announcing the deal in June, Sky tried to allay some competition concerns by entering into talks with 2degrees, the country’s number three mobile player about a possible content deal.

Vodafone’s closest rival Spark New Zealand meanwhile has not said if it would negotiate with Sky, but would be interested in bundling content.

The operator has also hit out at the proposed merger, insisting it should be blocked unless Sky changes the way it offers wholesale sport content to rivals.

Both Sky and Vodafone are expected to respond to the Commission by 11 November.