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Competition Tribunal decides Rogers-Shaw merger can move ahead

Canada’s Competition Tribunal cleared the way for the Rogers-Shaw merger to move ahead after dismissing the Competition Bureau’s application to block the proposed $26 billion acquisition.

The deal still requires approval from Innovation, Science and Economic Development Canada (ISED) and a spokesperson for Minister François-Philippe Champagne told The Globe and Mail that ISED was reviewing the tribunal’s decision and “will have more to say in due course.”

The Competition Tribunal released a summary of its decision on December 29th and plans to release a more detailed decision in the next two days. The summary notes that the tribunal found the merger would not result in materially higher prices.

Moreover, the decision said the sale of Shaw’s Freedom Mobile to Quebecor-owned Vidéotron — a key pillar of the deal — would likely not prevent or lessen competition substantially. Earlier this year, Quebecor agreed to buy Freedom for $2.85 billion.

The tribunal also dismissed concerns that Bell and Telus would not be able to compete with the combined Rogers and Shaw.

“I am very disappointed that the tribunal is dismissing our application to block the merger between Rogers and Shaw. We are carefully considering our next steps,” said Matthew Boswell, commissioner of the federal Competition Bureau, in a statement on the 29th. The Competition Bureau has 30 days to appeal the tribunal’s decision.

Additionally, The Globe and Mail reported that Rogers and Shaw agreed to extend the deadline of the proposed merger into 2023. The extension requires Rogers to pay its bondholders $250 million.

Source: The Globe and Mail, CBC News

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Mobile Syrup

Rogers, Shaw, Quebecor sign definitive agreement for Freedom sale

In a news release published the morning of August 12th, Rogers, Shaw, and Quebecor said they had signed a definitive agreement for the sale of Freedom Mobile.

According to the companies, the agreement is “substantially consistent” with the terms previously announced in June. The deal will see Shaw and Rogers sell Freedom Mobile to Quebecor subsidiary Vidéotron for $2.85 billion, conditional on regulatory approval of the Rogers-Shaw merger.

In the release, the three companies said they “strongly believe” selling Freedom will provide ” the best opportunity to create a strong fourth national wireless services provider and addresses the concerns raised by the Commissioner of Competition and the Minister of Innovation, Science and Industry, [François-Philippe Champagne,]” over the Rogers-Shaw merger.

Additionally, the release reiterated Quebecor’s past commitement to leverage the combined businesses of Vidéotron and Freedom to launch a national 5G offering with the former’s 3500MHz spectrum holdings.

Along with being conditional on the Rogers-Shaw merger, it’s worth noting that the Freedom sale would also be dependent on clearance under the Competition Act, as well as approval from Minister Champagne.

As for the Rogers-Shaw merger, it has already been approved by Shaw shareholders, the Court of Queen’s Bench of Alberta, and the Canadian Radio-television and Telecommunications Commission (CRTC). However, it remains subject to review by the Competition Tribunal and approval from Minister Champagne.

It’s worth noting that the Commissioner of Competition filed to block the merger in May, which led to the Competition Bureau, Rogers, and Shaw participating in tribunal mediation, although those mediation efforts failed in July.

However, if the Rogers-Shaw merger goes through and Vidéotron acquires Freedom Mobile, that will only resolve one of the multiple competition concerns with the merger. Along with wireless networks (which the Freedom deal would impact), there are concerns about combining Shaw’s internet and broadband services with Rogers. Those concerns have grown following the massive nationwide Rogers network outage on July 8th (dubbed ‘Red Friday’ by some).

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Mobile Syrup

Champagne says Rogers outage to be factor in Shaw merger decision

Innovation, Science and Economic Development Canada (ISED) Minister François-Philippe Champagne said policymakers would include Rogers’ July 8th service outage when considering the company’s proposed takeover of Shaw Communications.

As the Globe and Mail reports, Champagne told reporters at an event in Calgary on Friday that the outage will “be on the mind of the different people who need to make a decision.”

The proposed $26 billion merger would combine Canada’s two largest cable networks. However, the Competition Bureau is already trying to block the deal over concerns it will lead to poorer service and higher prices, especially for wireless customers. Rogers and Shaw have attempted to ease those concerns by striking an agreement to sell Shaw’s Freedom Mobile to Quebecor, which owns Vidéotron, for $2.85 billion. Friday was the deadline for the companies to reach a definitive agreement.

Moreover, the House of Commons committee on industry and technology adopted a motion on Friday to study the July 8th Rogers outage. The committee plans to review the cause of the outage, its impact on families, consumers and businesses, and look at measures to prevent future outages and ways to provide the public with timely information about outages.

The Globe reports that there will be at least two meetings dedicated to the study before July 30th. The committee plans to invite representatives from Rogers, the Canadian Radio-television and Telecommunications Commission (CRTC), and Champagne to appear.

A Rogers spokesperson told the Globe that the company will work with the committee to “provide details on the cause of the outage and the actions we are taking to enhance the reliability of each of our networks moving forward, including through formal mutual support agreements.”

For more on what caused the Rogers outage, check out MobileSyrup’s in-depth analysis here. Moreover, MobileSyrup detailed company plans revealed at an all-hands meeting Friday to separate wireless and wireline traffic to prevent future outages — you can read about that here.

Source: The Globe and Mail

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Mobile Syrup

Rogers accuses Bell, Telus of opposing Shaw deal to avoid competition in CRTC filing

A recent Rogers filing to the Canadian Radio-television and Telecommunications Commission (CRTC) accuses Bell and Telus of opposing the proposed Shaw merger to avoid competing with a stronger broadcaster.

In the document Rogers filed, the carrier claims that acquiring Shaw would enable it to compete with Telus and Bell more effectively. According to The Globe and Mail, Rogers also claimed it would help the company compete against foreign competitors like Netflix.

It comes as a response to requests made to the CRTC by Bell and Telus to deny Rogers’ acquisition. Both carriers raised concerns that the Rogers/Shaw merger would make the company’s broadcasting distribution market too large.

Specifically, the two telecoms argued that Rogers would control 47 percent of the English-language broadcasting distribution market (distribution of TV channels through cable, satellite or internet) if the proposal went through. Shaw’s broadcasting distribution business includes a satellite TV service called Shaw Direct and cable networks in B.C., Alberta, Saskatchewan, Manitoba and Northern Ontario. Bell and Telus say that if Rogers achieved that scale, it would gain control over the availability of programming services.

However, The Globe and Mail notes that Rogers countered those claims by pointing out that Bell is already the largest broadcasting distributor and that the company attempted to buy Shaw as well.

First, Rogers claimed in the submission that Bell had a larger market capitalization than Rogers and Shaw combined and called Bell’s concerns “ironic.” Further, Rogers said that if Bell had gone through with its attempted acquisition of Shaw, it would be advocating for approval of a deal that would create an even larger broadcasting distributor than what Bell’s currently opposing.

The Globe and Mail points out that although Bell attempted to acquire Shaw, it ultimately chose not to because it wasn’t willing to take on the regulatory risk.

CRTC to hold public hearing about merger on November 22nd

Of course, Bell and Telus aren’t the only companies opposing the acquisition. The Canadian Communication Systems Alliance, which represents Canada’s independent internet, television and telephone providers, also filed an intervention. So did Cogeco Communications, which Rogers repeatedly attempted to acquire last year. Moreover, Corus Entertainment warned that the Rogers/Shaw merger could harm Global News.

There are also other regulators scrutinizing the proposed Rogers/Shaw merger. The Competition Bureau is reviewing whether the merger will result in less competition, while the Ministry of Innovation, Science and Economic Development (ISED) will need to approve the transfer of spectrum licences. The CRTC’s role is to examine the transfer of broadcasting assets, and it will hold a public hearing on November 22nd.

It’s particularly interesting to see the carriers leverage competition as an argument both for and against the deal, given that so far, critics have lambasted the proposal for its potential to reduce competition and harm Canadians. Much of the criticism has been directed at wireless since Shaw owns Freedom Mobile. Should the wireless brand end up with Rogers, it’d further reduce the already lacking competition in Canadian wireless.

However, Freedom could be sold off as part of the deal, and Quebecor’s Videotron has indicated it might buy up the wireless business to help expand beyond Quebec. Ultimately, there’s still a long way to go in this process, and things could change significantly in the coming months.

Source: The Globe and Mail