Commissioner of Competition

The Commissioner of Competition says Rogers took its words on the divestiture of Shaw’s wireless assets to Vidéotron “out of context.”

The matter refers to the Commissioner’s updated response on the merger of Rogers and Shaw and the subsequent sale of Freedom Mobile. The response states the Rogers-Shaw merger and sale of Freedom to Vidéotron won’t increase competition.

The Commissioner says this is because of “factors which include Rogers’ different market position and incentives from Shaw and the difficulties and reduced competitiveness which Vidéotron will face without wireline assets and other benefits derived by Shaw from its wireline business.”

Rogers sought clarification on the second part of the sentence, asking the Commissioner to clarify the difficulties he believes Vidéotron will face.

“The words are taken out of context,” the response states. The Commissioner refers Rogers to its past response, stating Vidéotron will face barriers to entry in specific markets. Freedom’s decline since the merger was announced and Vidéotron’s ongoing challenge to access devices are also referenced for the reasoning.

Source: Competition Tribunal

The Commissioner of Competition’s recent response to Rogers’ $26 billion takeover of Shaw claims the two companies are selling the image of a competitive environment through the sale of Freedom Mobile while downgrading the competitive edge of Shaw Mobile.

The statements come through two updated responses, dated September 2nd and recently posted to the Competition Tribunal’s website.

As previously reported, the Commissioner has slated Rogers’ takeover of Shaw as anti-competitive. Referring to Rogers’ most recent filing on the merger, the bureau states Rogers “ignores” the harms the merger and its plans to sell Freedom Mobile to Vidéotron will have on the Canadian economy.

The sale of Freedom “fails to eliminate the substantial lessening and prevention of competition the proposed transaction will cause,” the Commissioner’s response states. Furthermore, the sale won’t replace the growing competition Shaw Mobile was delivering in Alberta and B.C., customers it gained at Rogers’ expense.

“The substantial growth in Freedom’s competitive significance under Shaw’s ownership amply demonstrate the significant benefits Freedom received from Shaw.”

The response also states Rogers erred in saying its takeover of Shaw would help compete against Bell and Telus. “Severing Freedom Mobile from Shaw’s wireline business will substantially compromise its ability to compete and provide much-needed competitive discipline to the national carriers.”

The response states the actions will “eliminate Shaw Mobile” while weakening Freedom Mobile, resulting in the “substantial lessening and prevention of competition.”

In its updated response to Shaw, the Commissioners’ application states Shaw downplayed its significance on the wireless market. “The launch of Shaw Mobile was profitable, having the intended effect of increasing overall profitability and reducing wireline customer churn.”

Source: Competition Tribunal