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Rogers, Shaw merger faces continued opposition

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Rogers Communications’ plan to buy rival Shaw Communications faces more uncertainty following continued opposition from Canada’s antitrust regulator.

The Competition Bureau rejected Rogers’ argument that the deal would benefit the economy and would offset harm to competition.

Last month, Capacity reported that both Rogers and Shaw remained defiant on the merger despite opposition from Canada’s Commissioner of Competition Matthew Boswell.

The proposed C$26 billion deal was initially approved by the Canadian Radio-television and Telecommunications Commission (CRTC) in March.

Proceedings to litigate the matter will start on June 23, potentially continuing until the end of the year.

Canadian law allows for mergers to be approved if those involved can prove it brings efficiency to the economy.

Reuters notes, however, that the Competition Bureau has not won a merger challenge before, thus it remains to be seen if its opposition will scupper the deal.

Official data indicates that of eight cases that have gone before the competition tribunal, it lost or settled six and two are pending.

Rogers has said it will sell its Freedom Mobile unit to Quebecor Inc for C$2.85 billion in the hopes of appeasing regulators opposed to the proposed takeover of Shaw.

A deal for Freedom will cover its branded wireless and internet customers, infrastructure, spectrum and retail sites.

Quebecor says the deal will ensure the "presence and viability" of a strong fourth wireless carrier in Canada.

This, however, would weaken Freedom’s operations according to the Bureau, who added it would take out “competitive discipline” for the national carriers.

Rogers chief executive Tony Staffieri reportedly told analysts that the company plans to retain 450,000 Shaw subscribers in Alberta and British Columbia because Quebecor and other potential buyers of Freedom refused to bid on the division.

Quebecor, which owns Montreal-based cable company Videotron is looking to expand nationally following the completion of the deal.

Its CEO Pierre Karl Peladeau called the agreement a "turning point for the Canadian wireless market" in a statement released on Friday.

Edward Rogers, chairman of Rogers Communications added: "This is a truly Canadian-made solution that will benefit all Canadians by delivering increased competition and choice, the next generation of telecommunications services and enabling the transformative benefits of a combined Rogers and Shaw.

"We look forward to completing the Shaw Transaction which would make Rogers a truly national telecommunications provider."