Canada’s Competition Tribunal gave the green light late last Thursday for Toronto, Ontario-based Rogers Communications (NYSE: RCI) to acquire Shaw Communications (NYSE: SJR), headquartered in Calgary, Alberta, ending the companies’ 20-month-old dispute with the Canadian antitrust authority, Reuters reported. The deal still requires approval from the Ministry of Innovation, Science and Economic Development (ISED).
Under the proposed deal, originally announced in March 2021, the Shaw family accepted a $14.7 billion purchase offer from Rogers. Subsequently, Rogers said it would invest roughly $1.8 billion to build a 5G network in Western Canada and spend another $740 million to connect rural and remote indigenous communities. To placate anti-competitive concerns that were delaying the merger, the two companies offered to sell Shaw’s Freedom Mobile wireless unit to Montréal, Québec-based Québecor that would then combine Freedom Mobile’s operations with Videotron, Québecor’s regional wireless operator, Inside Towers reported. That proposal was rejected by the Competition Bureau, however, claiming Québecor was not a viable competitor with the merged entity.
The Competition Tribunal held four weeks of hearings in 2022 to air concerns about the proposed deal. Throughout the hearings, the Competition Bureau argued the merger would lessen competition in the telecom market, trigger higher prices and lead to poor service.
The Tribunal dismissed the Commissioner of Competition’s request to block the merger, saying that the deal is “not likely to prevent or lessen competition substantially.” The panel also ruled that the proposed deal is not likely to lead to “materially higher” prices or a decline in service, quality, or innovation.
“The Tribunal has also determined that the strengthening of Rogers’ position in Alberta and British Columbia, combined with the very significant competitive initiatives that Bell and Telus have been pursuing since the Merger was announced, will also likely contribute to an increased intensity of competition in those markets,” the decision reads.
The Tribunal’s decision paves the way for closing the merger that would create the second largest telecom company in Canada after Bell. Concerns expressed by both Bell and Telus, Rogers’ main telecom competitors in Canada, that they would be unable to compete with the combined company were also dismissed. For their part, Rogers and Shaw argued that their deal forms a strong national operator that would enhance competition and be better for consumers.
In a last ditch effort to block the deal, the Competition Bureau on Monday secured from Canada’s Federal Court of Appeals an emergency interim suspension of the Competition Tribunal’s order until its “request for a stay and injunction can be heard.”
Enduring another setback, Rogers-Shaw and Québecor now await a decision on that appeal and then must get approval from ISED Minister François-Philippe Champagne to transfer Freedom Mobile’s spectrum license to Québecor. In October, Champagne said he would approve the sale as long as Québecor holds Freedom Mobile assets for at least 10 years. He also expects Québecor to keep prices comparable to its current levels where Videotron operates in Québec, which are roughly 20 percent lower than in Ontario and Western Canada where Rogers and Shaw, respectively, hold sizable market shares.
By John Celentano, Inside Towers Business Editor
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