EVEN WITH A DEFINITIVE agreement for the sale of Freedom Mobile to Quebecor subsidiary Videotron on the table as a way to remedy concerns about competition in Canada’s wireless market related to the proposed merger of Rogers Communications and Freedom owner Shaw Communications, a hearing in front of the Competition Tribunal on the matter appears to be all but inevitable.
“We understand that the parties believe that the sale of Freedom will address the concerns raised in our challenge of the Rogers-Shaw merger and have filed an amended response to the Competition Tribunal with this position,” a spokesperson from the Competition Bureau told Cartt.ca yesterday in an email, which also noted the bureau has not yet received a signed formal agreement regarding the sale of Freedom.
“The Bureau remains firm in its decision to challenge the merger of Rogers and Shaw to protect the public interest. The Commissioner filed a reply with the Tribunal on Monday, August 15, to that effect,” the bureau spokesperson said.
This is unsurprising. Despite Rogers, Shaw and Quebecor having said in a press release their agreement for the sale of Freedom “provides the best opportunity to create a strong fourth national wireless services provider and addresses the concerns raised by the Commissioner of Competition… regarding the Rogers-Shaw Transaction,” the commissioner previously indicated the sale of only Freedom Mobile would not be enough to assuage his concerns.
The commissioner has been aware of Rogers’ intention to sell Freedom since before he filed his application with the Competition Tribunal in early May seeking to block proposed merger of Rogers and Shaw, although no arrangement had been made for Freedom’s sale at the time.
The commissioner nevertheless argued in his application that separating Freedom from the rest of Shaw would leave a new Freedom owner operating less competitively.
Since then, Rogers, Shaw and the commissioner have tried to resolve the matter through mediation, which took place after it was initially announced in mid-June there was an agreement for Freedom to be sold to Quebecor. Mediation still failed, indicating the parties remained too far apart on what they wanted to come to an agreement to avoid a hearing at the Competition Tribunal.
Rogers, Shaw and the commissioner have been able to continue discussions to try to reach an agreement after mediation failed, but none of the parties have given any indication they are willing to concede their positions on the matter. (Rogers’ and the commissioners’ respective statements in relation to the definitive agreement for the sale of Freedom suggest the opposite is more accurate.)
The Competition Tribunal hearing on the merger could be finished by the end of the year, depending on several factors including Quebecor’s participation in it.
After the agreement for sale of Freedom was announced, Videotron filed a notice of motion with the Competition Tribunal indicating it would be requesting leave to intervene in the proceedings.
The tribunal granted Videotron leave to intervene on Aug. 4.
The Commissioner of Competition did not oppose Videotron being allowed to intervene in the case but did request a new scheduling order to account for the intervention, which would have seen pre-hearing and hearing dates pushed by weeks.
Videotron argued in a document filed with the tribunal “the proposed divestiture to Videotron likely significantly narrows the issues in dispute at the hearing meaning fewer weeks will be required,” and indicated “the Commissioner has had significant information from Videotron for some time, including information with respect to Videotron’s growth plans, historical market position in Quebec and in Ottawa, and its business plans with respect to the acquisition of spectrum and the proposed divestiture.”
On Aug. 4, the Competition Tribunal issued an order adjourning the commissioner’s motion regarding the scheduling order. While the scheduling order remains unchanged, the Commissioner of Competition is allowed to reintroduce his motion to amend it if he feels it is necessary.
It is possible this could still mean the merger will not be closed before another outside closing date for it passes.
The scheduling order that currently stands indicates the evidentiary part of the hearing will take place for four weeks starting Nov. 7, 2022. The order allows for a fifth week to be added, if necessary, which means this part of the hearing could extend until Dec. 8.
Written and oral arguments are then scheduled for seven and 12 days following the end of the evidentiary portion of the hearing respectively. If all five weeks of the hearing are needed, oral arguments would be scheduled for Dec. 20-21.
Even without any additional time added, the scheduling order already puts the end of the hearing close to the most recently announced outside close date for the merger, which is Dec. 31. There is a chance this date could be extended to the end of January 2023, “provided Rogers has committed financing available to complete the merger,” according to a press release from Rogers and Shaw who agreed not to close on the merger until after the tribunal ruled on the commissioner’s application.
Additionally, while the CRTC has given its approval, the industry minister still needs to approve the merger.
