Federal Court of Appeal holding conference today on hearing issues
By Ahmad Hathout
OTTAWA – In approving the Rogers and Shaw combination, the Competition Tribunal said the evidence shows Freedom under Videotron “would not in fact have a smaller scale” as opposed to its ownership under Shaw.
“Videotron will have more revenue, more wireless subscribers across the country, and more spectrum,” the tribunal said in its reasons for approving the deal released yesterday, which follows its announced decision on Thursday night.
“In addition, Videotron’s national presence will give it the ability to offer new incentives to businesses that operate nationally,” the tribunal further said, adding the cost Videotron paid for Freedom — $2.85 billion – pales in comparison to the more than $4.5 billion investment Shaw made in the mobile wireless company since 2016.
“This will effectively give Freedom a much more advantageous cost-base from which to compete, relative to that which is currently the case for Shaw,” the tribunal concluded.
And because Videotron obtained 3.5 GHz spectrum in the summer of 2021 – and Shaw was precluded from participating after the March 2021 merger announcement – in combination with 600 MHz spectrum, “consumers are not likely to be materially worse off with respect to 5G services” after the merger, the tribunal reasoned.
Videotron’s acquisition of VMedia this past summer would also help it roll-out bundled offerings, the tribunal said. The tribunal noted that the third-party internet access provider was acquired to assist Videotron in its push outside of Quebec and will help the company move more quickly on those offerings. “This is because it has advanced technology, including billing and servicing systems, as well as established TPIA connections with Rogers,” the tribunal said.
“The Tribunal is persuaded that the bundled offerings of Freedom and VMedia will be priced at a level that is at least as competitive as the offerings of Shaw Mobile and Freedom likely would have been in the absence of the Merger,” the tribunal said, adding the expansion of Videotron’s low-cost wireless Fizz brand would further punctuate a competition entity.
As part of the sale of Freedom Mobile assets to Videotron, Rogers will provide the Montreal-based company transition services free of charge for up to two years, with a paid third year option, including roaming services and access to Shaw’s Go WiFi public hotspots for all Freedom subscribers. Backhaul services from Shaw to Freedom will also be provided below market rates.
“Indeed, to the extent that Videotron is much more committed than Shaw to be a long-term participant in the relevant markets, the Tribunal expects that Videotron would be a more aggressive and effective competitor than Freedom and Shaw Mobile likely would have been in the absence of the Merger,” the tribunal said.
The tribunal also said it expects Videotron’s expansion into the provinces of Alberta and British Columbia to take market share away from Rogers, Bell and Telus, which have been making their own moves following the merger announcement.
The tribunal noted the late March 2021 announcements of Telus’s $1.3-billion fund raise and Bell’s announced “biggest-ever network acceleration plan” with an additional $1.7-billion investment, as well as Bell’s purchase of ISP Distributel, as evidence of competitive intensity and the “undermining the emergence of any conditions that might otherwise be conducive to coordinated behaviour.”
The Federal Court of Appeal yesterday granted the Competition Bureau a temporary suspension of the tribunal’s decision.
According to the court docket, the appeal court will hold a conference this afternoon to hammer out issues including whether the bureau’s appeal – filed on Friday – would need to be amended in light of the tribunal’s reasons released yesterday and whether Videotron will participate in the appeal.
