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Rogers-Shaw C$20bn deal approved by Competition Tribunal

Brampton, Ontario, Canada- November 4, 2018: Rogers Communicatio

Canada's Competition Tribunal has green-lit Rogers Communications plan to buy Shaw Communications for approximately C$20 billion.

The Competition Tribunal has officially dismissed concerns raised by Competition Commissioner which alleged that should the deal go ahead it could affect competition in the market by creating only three players.

As part of the terms of the transaction, Shaw is required to first transfer its subsidiary Freedom Mobile to Videotron, after which Rogers would only then be allowed to acquire the remainder of Shaw.

Specifically, the Competition Commissioner alleged that Shaw’s sale of Freedom to Videotron would "result in Freedom being a less effective competitor" post-merger; that Rogers’ acquisition of Shaw would "likely give rise to anti-competitive unilateral effects"; and that the deal would likely "facilitate the exercise of collective market power by Rogers, BCE (Bell) and TELUS Communications.

In response, to the first point the Competition Tribunal found stated that Videotron is an experienced market disruptor and that the bundled offerings of Freedom and VMedia (Videotron's telco and broadcast distribution provider) would likely be priced competitively.

In addition, it stated that "there will continue to be four strong competitors in the wireless markets in Alberta and British Columbia, namely, Bell, Telus, Rogers, and Videotron, just as there are today" adding that £the strengthening of Rogers’ position in Alberta and British Columbia, combined with the very significant competitive initiatives that Telus and Bell have been pursuing since the Merger was announced, will also likely contribute to an increased intensity of competition in those markets".

In response, Shaw Communications released a statement saying "the Competition Tribunal’s ruling is comprehensive, thoughtful, well-reasoned and clear in its finding…"

In fact, in its 88-page decision the Tribunal considered carefully the evidence provided during a month-long hearing…. We are confident that these pro-competitive transactions will bring more choice, more affordability, more innovation and more connectivity to Canadians, and that the Competition Tribunal’s decision was the right one.

The decision points out that the Commissioner’s position and case relied heavily on evidence from our principal competitors, including TELUS. In attempting to block these transactions, the decision makes clear that the Commissioner’s position served the interests of TELUS and not consumers.

The Tribunal’s decision also found that the Commissioner’s case is “divorced from reality.” The Tribunal disagreed with the premise of the Commissioner’s case that focused on a non-existent transaction in which Rogers acquires Freedom that no party intends to proceed with and that will never happen, rather than the clearly pro-competitive reality of Videotron's acquisition of Freedom…"

At the time of the announcement, OpenMedia, a Canadian telecoms advocacy group, wrote: " Today’s approval comes despite strong opposition from many thousands of Canadians who have called on the Bureau and Cabinet to block the deal since it was first announced on March 21, 2021."

“Today was the last nail in the coffin of telecom affordability in a dismal 2022,” said Matt Hatfield, Campaigns Director at OpenMedia.

“Experts, MPs and ordinary Canadians all know it: this buyout means higher prices and fewer choices, in a telecom market that’s already far too concentrated. In the last year alone, Distributel, EBOX and VMedia have all been bought out by the Big 3. Allowing Rogers to become the single largest Internet provider in the country is just the cherry on top. If 2023 is going to turn things around, Minister Champagne and new CRTC chair Vicky Eatrides will need to take immediate action, starting with opening our telecom market to broader service-based competition at fair prices.”

Since then, the Competition Bureau says a Federal Court has issued an emergency stay temporarily suspending the Competition Tribunal’s dismissal of its case against the Rogers-Shaw merger, which is reported to remain in place until its application for a stay and an injunction is heard.

In a Tweet on Monday 2nd January, the Competition Bureau wrote:

Adding: "We remain very disappointed by the Tribunal’s decision. We are carefully reviewing it and the reasons released last night."

Capacity will continue to follow this story.