“A very strong opening” to Shaw-Rogers Competition Tribunal proceeding: former Competition Bureau advisor

The recent move by Canada's competition watchdog to block the pending acquisition of Shaw Communications Inc by Rogers Communications Inc. shows that the bureau is "aiming much higher" than a simple wireless remedy, though it doesn't put such a remedy out of reach entirely, according to one competition law expert. The notice of application to the Competition Bureau to the Competition Tribunal, filed Monday and posted to the tribunal's website Tuesday, "shows a deep understanding of what makes an effective competitor in the market" and marks a "very strong opening" to the tribunal proceeding, Centre for International Governance Innovation fellow and former Competition Bureau special advisor Keldon Bester said in an interview with the Wire Report. "I was very pleasantly surprised to see the bureau draw a direct line from the success of the wireless business to access to the wireline assets and, critically with the bundling arguments, to the wireline business," Bester said. Indeed, the bureau wrote in its application to the tribunal that a simple divestiture of Shaw's wireless assets in the $26 billion deal would still harm competition in the wireless space “by severing from the divested business the wireline assets that the Shaw Mobile brand utilizes to provide bundles of wireline and wireless services to consumers in Alberta and British Columbia, and by weakening the competitiveness of the Freedom Mobile business and its ability to compete, innovate and grow.” The Competition Bureau is "communicating a real skepticism about a Frankensteined-together remedy that ticks the box of a fourth wireless player," Beston said, while at the same time adding that the filing still leaves the door open to a remedy that could satisfy the bureau. "I don't think the Competition Bureau accepting a wireless remedy is out of bounds, but what the application suggests is that it will have to go much deeper into Shaw's internet business than I would have assumed last week," he said. For Public Interest Advocacy Centre (PIAC) executive director and general counsel John Lawford, the door to a wireless remedy is only open a crack. "Unless there is a very much improved divestiture or other concessions on Rogers’ part and a very strong potential fourth player with clear financing and a vision that addresses the very problems is talking about in the application, I would think that the application is going to go ahead," Lawford said in an interview with the Wire Report. PIAC is opposed to the merger and has filed a petition with the cabinet to overturn the CRTC's approval of the transfer of Shaw's broadcasting assets to Rogers. One such problem, according to the bureau, echoes comments made by BCE Inc. chief financial officer Glen LeBlanc. LeBlanc told investors during a March investor conference that any version of Freedom after divestment – what the bureau calls "New Freedom" – will be weaker than what came before. LeBlanc said in March that any player that picks up Freedom Mobile "“will be weaker than what Shaw has been." “It will be a wireless-only player; will likely have a weaker balance sheet competing against integrated national operators,” the Bell executive said, adding that if the deal is rejected outright then the marketplace is back to status quo. “I would say that we’re comfortable, fairly relaxed with any outcome,” he said in March. This week, the Competition Bureau agreed, writing in its application that "separating Freedom Mobile from Shaw will reduce New Freedom's competitiveness." The bureau pointed to the need to invest in 5G developments, the ability to "offer bundled services by cross-subsidizing and cross-marketing between its product lines with promotions and discounts," and the loss of some 450,000 WiFi "hotspots" and lack of Shaw's retail footprint – all of which would hamper the ability of the newly divested entity to compete with Rogers. From Lawford's perspective, the Competition Bureau "wins either way" with its filing. "If they do it and they stop , then they're heroes. If they do it and they lose in the tribunal, then they can go back to parliament and say 'look our act isn't good enough'," Lawford said, adding that the case may come down to the so-called "efficiencies defense", a section of the Competition Act which allows a merger to proceed on the basis of efficiencies to be gained despite the harm done to competition. In February, the Competition Bureau called for the overhaul of Canadian competition law, including for the removal of the efficiencies defense in response to Senator Howard Wetston’s October consultation invitation on the Competition Act. In a Thursday letter to Innovation Minister François-Philippe Champagne, the advocacy group OpenMedia called on the minister to block the merger "under any circumstances." "With or without Freedom Mobile included, the Rogers-Shaw buyout is bad for people in Canada and must be blocked. We know that the increased telecom prices that will come from this deal are the last thing our country needs, particularly with the rising costs of food, gas and other basic goods," OpenMedia wrote, referencing a May 2021 62,000-strong petition against the merger. By mandating that any spectrum assets owned by Shaw should stay with the divested wireless company and not be transferred to Rogers, "you can leave the Rogers-Shaw buyout dead in the water today," OpenMedia wrote to Champagne. On Thursday, Quebecor, Inc. CEO Pierre Karl Péladeau "welcomed" the Competition Bureau's application. "This is completely in line with our position which we have stated publicly on numerous occasions," Péladeau said. "The only way to encourage lasting competition and lower prices for Canadians is by ensuring that the Freedom and Shaw wireless assets end up in the hands of a nationally viable long term wireless operator like Quebecor who has demonstrated the ability to compete effectively against the big three with market share and bring down prices." Quebecor has recently reentered negotiations to purchase Freedom Mobile. – Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

“A very strong opening” to Shaw-Rogers Competition Tribunal proceeding: former Competition Bureau advisor

Broadcast | May 12, 2022

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us

“A very strong opening” to Shaw-Rogers Competition Tribunal proceeding: former Competition Bureau advisor

Broadcast | May 12, 2022

Unlock all the Canadian telecom, broadcasting and digital media news you need.

FREE TRIAL

SUBSCRIBE

Related Stories

Wholesale internet rates must be the same coast to coast: Peladeau

Quebecor seeks to review and vary Bell MVNO decision

Quebecor’s revenue, profits drop in Q3 2024

Quebecor acquires advertising business, expands ad reach in Canada

Reuse & Permissions

Inside The Wire Report

Information

Hill Times Publishing

Get in Touch With Us