Adds Competition Act is outdated
By Ahmad Hathout
TORONTO – Investment company Globalive Capital said yesterday that its offer to purchase Freedom Mobile from a combined Rogers-Shaw entity is still open, as it blasted the prospect of Quebecor’s Videotron acquiring Shaw’s wireless company at a discount.
“Globalive’s bid to purchase Freedom Mobile at a $900 million premium over Videotron remains open, and is a reminder that Canada has choices,” said the statement, which came on the day that the Competition Tribunal wrapped up its hearing on the evidence in Rogers’s pursuit of buying Shaw Communications. Globalive sent a letter to Innovation Canada, the competition commissioner, and the prime minister this summer pitching its case that it is a better suitor than Videotron for the wireless assets.
Rogers agreed to sell Freedom to Videotron for less, at $2.85 billion, which the Competition Bureau said was not enough to mitigate the alleged anticompetitive nature of the Rogers-Shaw deal. That stance led to four weeks of tribunal hearings after the bureau sued to stop the transaction.
“Simply put, Videotron is not an adequate remedy to the anti-competitive consequences of this proposed merger because it is not a true, independent pureplay operator – and pureplay is what Canada is sorely lacking,” the statement added, referring to a dedicated wireless player in the market.
The investment firm pointed to the success of T-Mobile south of the border, which, after closing its purchase of Sprint in 2020, dedicated the business to wireless services such as 5G. (T-Mobile sold wireless assets to Dish Network as a condition of the acquisition.)
During the tribunal hearing, the motives behind the deal were questioned, with the disclosure that Rogers and Shaw executives would make millions in bonuses if the deal closed. “There can be no doubt that these bonuses reflect the true incentives of Rogers and Shaw,” the Globalive statement said. “These companies are not motivated by consumer interest, but rather continuing to line their own pockets.”
Globalive also questioned Videotron’s motivations for Freedom by pointing to its alleged history of buying up spectrum at a discount – Videotron participates in auctions for set-aside spectrum, which allows it to avoid competing against the national players – and selling it off to established players at a profit.
During one session, the tribunal heard evidence that Videotron passed on the opportunity to buy Shaw because it thought it would be able to capture those customers on its own. In another, it heard from a Bell witness that Freedom is less competitive since Rogers and Shaw announced their proposed deal in March 2021. Telus, the third-largest telecom, also got in on the act by meeting with political leaders to allegedly “kill, shape and slow” the deal, the tribunal heard.
Globalive also called into question the Competition Act’s suitability for dealing with such a mega deal. “The Competition Act, which has never been used to successfully stop an anticompetitive merger, was developed and introduced at a time when Canada was looking to bolster large corporations,” the statement said.
“If the proposed transfer to Videotron is ultimately permitted by the Tribunal, this would be yet another failure of the flawed Act, not a failure of the Commissioner,” the statement added. “It will be up to [Innovation Minister Francois-Philippe] Champagne to stand with his Commissioner, and on the side of Canadians, to prevent this merger from proceeding.”
Globalive owned Wind Mobile, which became Freedom Mobile in 2016, following Shaw’s purchase of the company for $1.6 billion. In May, Globalive signed a 20-year network and spectrum sharing agreement with Telus contingent of the sale of Freedom to the investment company.
Photo of Anthony Lacavera, founder and chairman of Globalive Capital
