Telecoms file arguments in Competition Bureau appeal of Rogers-Shaw merger

All eyes in the telecom world will be focused on the Federal Court of Appeal (FCA) next Tuesday when it hears the appeal from the Commissioner of Competition over the proposed takeover of Shaw Communications Inc. by Rogers Communications Inc. The Competition Tribunal dismissed the Competition Bureau’s (CB) original case back in late December. This week Rogers, Shaw and Quebecor Inc. all filed their briefs with the court. Quebecor subsidiary Videotron is planning to buy Freedom Mobile from Shaw ahead of the merger of the other two companies. “This appeal concerns an unmeritorious challenge by the commissioner of competition to a once-in-a-generation transaction that will significantly enhance competition in the provision of both wireline and wireless service for Canadians,” Shaw wrote. “Through his appeal, the commissioner seeks to circumscribe the tribunal’s jurisdiction and usurp its function,” Videotron agreed in its submission. “That is not his place. The commissioner enforces the Act; he does not adjudicate it. The commissioner’s appeal must be dismissed.” The Quebec firm said it is the bureau, not the tribunal, that is overreaching its jurisdiction. All the briefs attack the commissioner for arguing points that did not come up in the weeks-long hearing before the tribunal. For example, the bureau asserts that the tribunal should consider the effect of Rogers controlling Freedom, when this will never happen in real life. “The tribunal found that Rogers could not possibly acquire the entirety of Shaw’s business (including Freedom)--an unchallenged fact that the commissioner knew before commencing his application,” the Toronto company wrote. The sale of Freedom is an established fact. It is not a trial balloon, as the bureau is claiming, the filing continued. Videotron informed the bureau of its desire before the hearing; the commissioner refused to meet with representatives of the telecoms. It made those representations in April 2021. Videotron also agreed to conditions put on it by Innovation Minister François-Philippe Champagne in October. The minister wants Videotron to hold spectrum licences for a decade and he said expects to see a decrease in prices for wireless service. He also stipulated that he would not permit the transfer of Shaw’s spectrum to Rogers. The commissioner likewise maintains that the takeover will result in reduced competition. The telecoms dispute this. Shaw says there is no evidence that the merger will cause substantial prevention or lessening of competition (SPLC). Its would-be partner agrees. “Drawing on its specialized expertise, the tribunal rejected the argument and opinion evidence that the transaction will give rise to a substantial lessening of competition,” Rogers wrote. “It found that the transaction will bring positive effects to consumers and to the economy–increased choice, better networks, and lower prices for consumers.” The tribunal may by law order a remedy if it finds an SPLC. It is under no requirement to do so, Shaw contends, and probably would not in this case. Rogers noted that the tribunal had accepted the testimony of its expert witnesses at the expense of those brought forward by the bureau. It also found that BCE Inc. and Telus Corp. did not have credible witnesses. “In a comprehensive 80-page decision, the tribunal assessed the evidence of more than 40 lay and expert witnesses and unanimously dismissed the commissioner’s application,” Shaw wrote. “In doing so, the tribunal considered and dismissed virtually all of the commissioner’s theories and contentions.” “The commissioner's argument is nothing more than an attempt to re-litigate evidence that the tribunal did not accept,” Rogers stated. Videotron agreed. “The tribunal is not the commissioner’s servant,” the telecom wrote. “It is an independent, expert adjudicator under the Act.” National Bank of Canada analyst Adam Shine reiterated his position that the bureau’s case is weak. He cited a Reuters story which said Champagne would rule on the transfer of Shaw’s spectrum to Videotron following a Federal Court of Appeal ruling. “Are the CB’s arguments about errors of law made by the tribunal likely to trigger a different opinion by the FCA?” Shine asked. “We can’t say for sure, but the desire to continue to litigate a non-existent transaction and force a multi-part review of transactions that have been deemed by the tribunal to not prevent or substantially lessen competition would suggest that the CB isn’t building on a solid foundation heading into this appeal.” All of this comes as Globalive, which was rejected in its quest to buy Freedom, is mounting a social media campaign to stop the takeover. It is printing coupons that people may clip and send to their MPs, requesting that the government prohibit the merger. –Reporting by Paul Park at ppark@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Telecoms file arguments in Competition Bureau appeal of Rogers-Shaw merger

News | January 18, 2023

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Telecoms file arguments in Competition Bureau appeal of Rogers-Shaw merger

News | January 18, 2023

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