The Competition Tribunal dismissed concerns from the Competition Commissioner that the deal would see customers face higher prices
Back in March 2021, Rogers Communications agreed to buy rival Shaw Communications for around C$21 billion, saying the tie-up would allow for increased investment in 5G rollout and create around 3,000 jobs.
However, as was to be expected from a merger of this nature, which would reduce the Canadian mobile market to just three national players, the deal quickly came under intense regulatory scrutiny. For over a year now, the companies have been negotiating with regulators to close the deal.
With Rogers already the mobile market leader in Canada, much of the regulatory discussion centred around the future of Shaw’s mobile unit, Freedom Mobile, the acquisition of which would make Rogers’ market dominance unassailable.
As such, regulators eventually ruled that Shaw must divest of the unit to facilitate the merger, with the operators ultimately agreeing to sell the business to Montreal-based wireless operator Vidéotron in August last year. Conditions were attached to the sale to ensure that Vidéotron would use Freedom Mobile’s spectrum and infrastructure to become Canada’s fourth national mobile operator, with Canada’s Minister of Innovation, Science and Industry, François-Philippe Champagne, seeking to ensure that the company was “in it for the long run”.
But despite assuaging some regulatory concerns, Canada’s Commissioner of Competition Matthew Boswell still moved to block the deal in May last year, saying the deal would be bad for competition and drive-up prices for customers. He would also later argue that Freedom Mobile was a more effective market competitor under Shaw’s ownership than it would be under that of Vidéotron.
Now, however, the government’s Competition Tribunal has rejected this plea, saying it does not believe the deal will have the negative impacts Boswell describes.
“It bears underscoring 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 is today. Videotron’s entry into those markets will likely ensure that competition and innovation remain robust,” said the Tribunal in its ruling.
Boswell said he was disappointed by the decision and would appeal the decision. As such, a Federal Court has issued an emergency stay temporarily suspending the Competition Tribunal’s dismissal of the case until the application for an injunction can be heard.
Nonetheless, this decision leaves very few roadblocks left for the merger. Champagne is expected to formally approve the transfer of Freedom Mobile’s spectrum to Vidéotron later this month, with the Rogers–Shaw merger itself likely to follow in short order if the Competition Commission’s appeal is rejected.
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