New Zealand's biggest exhibitors - Village Force Cinemas and Hoyts Cinemas - have admitted publicly that they have abandoned plans to merge because of the New Zealand Commerce Commission's continued opposition to the deal.

The two players would have jointly owned about one third and jointly controlled about three quarters of the country's screens.

Village Force Cinemas CEO Joe Moodabe said the management time and cost involved in a protracted legal battle would negate any benefits to be derived from the merger and not be in the best interests of shareholders. But he did not back away from the assertion that the plan is within the law.

Hoyts and Village Force - a nine-year-old joint venture between Australia's Village Roadshow and the New Zealand construction company Force Corporation - proposed the merger last year. From the outset the commission was concerned about the impact it would have on competition in both distribution and exhibition.

The companies plan to retain their joint venture interest in the Queen Street multiplex, part of the Force Entertainment Centre in Auckland, providing they get approval from the New Zealand Overseas Investment Commission.