Competition Bureau “considering our next steps”
By Ahmad Hathout
OTTAWA – Canada’s competition court has dismissed an application by the Competition Bureau to block the merger between Rogers and Shaw, leaving only approval from Innovation Canada in the way of the blockbuster $26-billion deal.
The deal involves the sale of Shaw’s Freedom Mobile brand to Quebecor’s Videotron, which the competition commissioner had argued in his application was not satisfactory to allay competition concerns.
But the tribunal did not agree, saying the deal’s components and compromises “are not likely to prevent or lessen competition substantially,” the Thursday decision said.
In fact, the tribunal said it believes Videotron, being an “experienced market disrupter,” has “drawn upon that experience to develop very detailed and fully costed plans for its entry into and expansion within the relevant markets in Alberta and British Columbia, as well as in Ontario.”
The court noted that Videotron’s acquisition of VMedia earlier this year was an example of the company moving to expand its bundled service offerings, concluding that those offerings would “likely” be priced at a level “at least as competitive” as those that would have come from Shaw Mobile and Freedom without the merger. It also said that same dynamic would also likely emerge for wireless-only offerings from Freedom and Videotron’s low-cost Fizz brand, and that Videotron will likely roll out 5G services in western Canada in a time frame that ensures competition is robust.
“In other words, the Merger and Divestiture are not likely to result in materially higher prices, relative to those that would likely prevail in the absence of the arrangement,” it added. “The Merger and Divestiture are also unlikely to result in materially lower levels of non-price dimensions of competition, relative to those that would likely exist in the absence of the arrangement. Such non-price dimensions of competition include service, quality, variety, and innovation.”
The tribunal said it did not agree with core arguments from the bureau, including the assertion that Rogers’s acquisition of Shaw Mobile – the company’s primary mobile brand – would create anticompetitive effects in the market, and that the deal would create a “collective market power” by Rogers and the two other telecom giants, Bell and Telus.
The tribunal said it was confident that a fourth player in key Canadian markets would emerge in Videotron.
“We are pleased with the favourable decision from the Competition Tribunal and thank the Tribunal members for their work in rendering a swift decision,” Rogers and Shaw said in a joint decision.
“This is an important milestone in the regulatory process and moves us one step closer to closing a series of transformative transactions proposed by Rogers, Shaw, and Quebecor,” the statement added.
The last hurdle for the deal is an Innovation Canada approval, which is dealing with the spectrum side of the deal including the transfer of Freedom’s spectrum assets to Videotron.
“We look forward to reviewing the details of the decision and working with the Minister of Innovation, Science and Industry so we can clear the final regulatory hurdle to close these transactions,” the joint statement added. The companies have also said in the statement they have extended the transaction deadline, including the sale of Freedom, to January 31, 2023.
Innovation Minister Francois-Philippe Champagne has previously said that any new spectrum licenses acquired by Videotron must be held by the Montreal-based company for at least 10 years, ensuring the service provider is “in it for the long run.” He also said he expects wireless prices to be comparable to those in Quebec, which are the lowest in the country.
Meanwhile, Competition Commissioner Matthew Boswell said in a statement that he is “very disappointed that the Tribunal is dismissing our application to block the merger between Rogers and Shaw.
“We are carefully considering our next steps.”
Anthony Lacavera, founder and chairman of investment firm Globalive Capital, which has been trying to purchase Freedom Mobile, released a statement today taking aim at the competition laws of the country that he said allowed for such a deal to move forward.
“Sadly, it’s no surprise that the Competition Act, which has failed to protect Canadians from every anti-competitive merger for the past 40 years, has failed us yet again,” Lacavera said. “The government must step in to stop this merger, and then oversee a fair, open, and transparent process to sell the Freedom Mobile wireless assets and ensure the best outcome for Canadians.”
The decision capped a more than month-long hearing on the evidence and core arguments that was concluded in mid-December.
