Just because the commission wasn't presently satisfied the merger wouldn't reduce competition, that doesn't necessarily mean it would decline the deal, he said.
Shane Solly, director at Harbour Asset Management, said the letter was a "red flag" for investors that the commission was willing to "challenge commercial arrangements".
Sky TV plans to buy Vodafone New Zealand for $3.44b in cash and shares in a reverse takeover which would see Vodafone's British parent group own 51 per cent.
Although the commission has yet to approve the deal, Sky TV shareholders have voted overwhelmingly in favour of the merger, which would create a business with roughly 4000 staff and revenue of around $3b.
In its letter, the commission's competition manager Katie Rusbatch said the regulator was concerned because: The merged business would have "substantial market power by virtue of its portfolio of content, including premium content such as live rugby";
The combined company would have the ability and an incentive to make buying Sky by itself less attractive than in a bundle with a mobile or broadband package. This would lead to customers moving to the merged business; It would also have less of an incentive to enter into reselling deals with others and, therefore, rivals would be unable to offer bundled Sky and telecommunications packages.
This could mean one or more rivals may lose customers and therefore no longer provide an "effective constraint" in the telecommunications market, which could lead to price rises.
Spark and 2degrees have formally opposed the merger, saying the deal would adversely affect consumers as a result of creating a company willing and able to use premium live sports content to stifle competition, something Sky TV chief John Fellet described as "misleading and inaccurate".additional reporting BusinessDesk