Federal Court and Competition Tribunal didn’t understand Rogers-Shaw merger: Prof

OTTAWA–The Federal Court of Appeal and the Competition Tribunal did not properly understand the implications of Rogers Communications Inc.’s merger with Shaw, according to a law professor speaking at the International Institute of Communications Canadian chapter 2023 conference. At the same time Canada’s competition cop said he stands by his decision to seek a “full block” of the acquisition. “This wasn't a four-to-three merger. If you look closely, it wasn’t even a three-to-three merger because Bell and Telus are not really competing in the same regions,” Université de Montréal competition law professor Pierre Larouche told the conference during a panel discussion on Canada’s competition laws. Larouche noted that elsewhere in the world, such as in France, governments have been actively opposing four-to-three mergers. “So this is not an easy case. When I read the court of appeal saying this was an open and shut case, I found this unbelievable. So I think the bureau was right to object to the merger,” he said. Larouche said going forward the bureau should have the power to make decisions while the Competition Tribunal’s role should simply be to review those decisions. “The bureau should have had the power to just go to the tribunal to say ‘we don't like the majority of remedies offered, this is our decision, now review this.’ Instead of having the tribunal, out of thin air, ignore what the bureau did.” In a keynote following the panel, Competition Competition Bureau commissioner Matthew Boswell said his resolve is stronger than ever to protect and promote competition in the telecom market. “Plenty has been said about the Competition Bureau’s challenge of the Rogers/Shaw merger. I will be blunt: it was a tough loss for us. While it didn’t go our way, I fully stand by our decision to challenge that merger,” he said. Boswell said his office fought “the right fight for the right reasons and on the right principles.” Former Commissioner of Competition John Pecma, who advised Rogers on the merger, said the appeal court and the tribunal got the decision right “if you look at the narrow interpretation of the law.” “I mean, clearly there's a concentration issue in wireless in Canada. But this deal didn't change the dynamic significantly,” he said. “ Videotron is now in control of Freedom whereas in the past it was Shaw. But Shaw wanted out of the market so how can you rely on them to be a strong competitive force when they want out,” he said. Both Pecma and Larouche, as well as panelist and associate professor at the University of Ottawa’s Faculty of Law Jennifer Quaid, agreed the entire review and litigation process took too long. “It’s unconscionable,” Pecma said. Shaw's state of limbo created uncertainty for its employees and customers over the course of two years, leaving it vulnerable to BCE Inc. and Telus Corp. “So the big boys are getting stronger while this review is taking place and Quebecor is getting a weaker asset at the end of the day because its employees and customers are gone to the competition,” he said. All three panelists also agreed that the efficiencies defence, one of the factors at play in the takeover, needs to be repealed from the competition act. Boswell’s office put forward the same recommendation in response to government initiatives seeking to overhaul the Competition Act. “The current structure is something that requires change. The precise way to do it, I suppose, is open to discussion,” Quaid said. Quaid noted a lot of efficiencies are actually never realized. “I think it's time that we really take a serious look at how well efficiencies are converted into benefits for the Canadian public,” she said. The defence was introduced almost 40 years ago as a means of allowing Canadian companies to compete internationally. However, according to Pecma, there has not been a single deal that involved exports that benefited from the defence. “It's now become almost unbelievable in terms of the burden on the bureau to calculate all the harm and quantify it all, and then have to quantify all the savings that, so many of which, are never realized,” he said. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca .

Federal Court and Competition Tribunal didn’t understand Rogers-Shaw merger: Prof

News | May 16, 2023

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Federal Court and Competition Tribunal didn’t understand Rogers-Shaw merger: Prof

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