New Zealand's competition regulator wants to know why it shouldn't knock back the proposed NZME/Fairfax merger.

A draft determination under the Commerce Act says its "preliminary view" is that the merger should be rejected. But the regulator is giving parties time to persuade it otherwise.

The commission has already said that the application is outside its experience; now it says an assessment the impact of the merger on competition in both advertising and reader markets "for a number of media platforms as well as the overall impact on quality and plurality (diversity of voices)" inclines it to refuse the application.

But it's not actually doing so.

Instead, it is inviting further submissions within the next fortnight. Closing date is COB November 22.

It says its "preliminary view" is that the merger would be likely to substantially lessen competition in a number of markets, including those for premium digital advertising, advertising in Sunday newspapers and advertising in community newspapers in ten regions throughout New Zealand. It also considers the merged entity would be likely to increase subscription and retail prices for Sunday newspapers and introduce a paywall for at least one of its websites.

Chairman Dr Mark Berry said the merger would result in one media outlet controlling nearly 90 per cent of New Zealand's print media market, the second-highest level of print media ownership in the world, behind only China.

The merged entity would also control the country's two largest news websites - nzherald.co.nz and stuff.co.nz - which together have a population reach more than four times larger than the next biggest domestic news website, and would own one of its two largest commercial radio companies.

"All this would result in an unprecedented level of media concentration for a well-established liberal democracy," he said.

"Our preliminary view is that competition would not be sufficiently robust to constrain a multimedia organisation, potentially with a single editorial voice, that would be the largest producer of national, regional and local news by some margin in New Zealand."

The two parties each play a substantial role in influencing the news agenda, with competition between them driving content creation, increasing the volume and variety of news available in New Zealand and assisting with objectivity and accuracy in reporting. "Our view is that the removal of this competitive tension would likely lead to a reduction in the quality and quantity of New Zealand news content both online and in print, with potential flow-on effects in television and radio," Dr Berry said.

"We recognise that the merger would achieve net financial benefits through organisational efficiencies. However, while we cannot quantify the detriments we see with respect to quality and plurality of the media, we consider that detriments resulting from increased concentration of media ownership in New Zealand would outweigh the quantified benefit we have calculated. In particular, the potential loss of plurality has weighed heavily in our draft decision. On this basis, we propose to decline the application."

Submissions should be sent to registrar@comcom.govt.nz (reference Fairfax/NZME in the subject line) or to PO Box 2351, Wellington 6140, and will be posted on the Commission's website.

December 6-8 in Wellington has been earmarked for a possible conference prior a final determination being made.