SQ was actually blocked by NZ the first time around from acquiring News Corp's 50% of AN.
The bloke running NZ (aka Selwyn 'Borghetti' Cushing) used his veto to block SQ from purchasing AN purely due to his ego despite fully knowing his company didn't have the balance sheet to fix an ailing AN.
The then-AN CEO Eddington left not soon after and Cushing installed his hapless 'sidekick' Gary Toomey as CEO of the combined group.
The AU feds and QF had little to nothing to do with the final days of the AN stakeholder situation. The NZ feds may had issues with SQ stake in NZ from memory prior to the AN collapse.
Source:
https://australianaviation.com.au/20...sett-collapse/