The judge has reserved her decision after NZME and Stuff's owner Nine butted heads over whether they were still in an exclusive negotiation period or not.
Stuff and NZME are seeking leave to appeal the High Court decision blocking their merger. Photo: RNZ
NZME told the High Court the owner of its biggest rival Stuff breached an exclusivity agreement that prevented negotiating with any other possible buyer.
It is the latest development in a long-running saga between the two commercial media entities who have come under increasing financial strain which has only been exacerbated by the Covid-19 pandemic.
NZME announced this week it was asking the government to allow it to buy Stuff for a nominal $1.
This was challenged by Stuff's Australian owner, the ASX-listed Nine Entertainment, which said talks finished last week with no deal.
The last time the two companies were in court they were on the same side; fighting for a merger twice rejected by New Zealand's competition watchdog, the Commerce Commission.
NZME has now taken Nine to the High Court over the potential purchase of Stuff; arguing it breached an exclusive two-week negotiating period that began on 23 April.
Nine denied these allegations, arguing the contract had been 'frustrated' - a contract law term that effectively means null and void.
An application filed by NZME for an interim injunction to enforce this binding agreement was heard by Justice Katz in the High Court at Auckland this morning.
RNZ's media application to record today's hearing was opposed by both NZME and Nine's lawyers, and was declined by Justice Katz on the basis the hearing would traverse a wealth of confidential information.
For this reason, large portions of confidential and commercially-sensitive discussions in court today can not be reported.
This morning, NZME's lawyer Jack Hodder told the court Nine failed to comply with what was effectively "a lock out agreement" that guaranteed NZME a period of exclusive negotiation.
Hodder said the narrative unravelled in the context of a global pandemic that had created an "overwhelming level" of crisis.
Nine's lawyer John Dixon began his submissions by saying the provision of exclusivity had been "frustrated" over time.
"It is futile and as a matter of law it has come to an end. The purpose of the exclusivity provision was to give NZME a short opportunity, contemplated by parties to be two or three weeks, to complete due diligence and document an offer to Nine - an offer Nine had no obligation to accept."
He said both parties understood the arrangement had to be done quickly and could not be conditional on a formal clearance process that would inevitably throw it into a lengthy, uncertain and expensive process.
Dixon argued there had been a "radical change in circumstances" and any exclusive arrangement between NZME and Nine had ceased to exist.
"This is not a takeover situation where NZME can force an acquisition ... under the law of frustration, once the contract is frustrated it comes to an end immediately."
He went further to say NZME was actively trying to harm Stuff by continuing to seek insight into its competitor's operations.
"This is not just one competitor seeking to acquire another. This is the main - the only real - competitor seeking access to highly confidential and commercially sensitive information about the business and the business' forecast, where there is not a purpose for that in the way that there had been at the time the parties entered into the agreement."
He said NZME's surprise statement to the NZX on Monday about buying stuff for $1 was "utterly unnecessary".
"There is no purpose in that announcement and no need for it under the NZX rules. It's simply designed to hurt its competitor. The concern is not just the futility but the harm that we will suffer as a result."
Justice Katz reserved her decision.
