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The Rogers Communications building in Toronto on October 22, 2021.CARLOS OSORIO/Reuters

Canada’s Commissioner of Competition has taken an “unreasonable” position and has failed to demonstrate that Rogers Communications Inc.’s RCI-B-T $26-billion takeover of Shaw Communications Inc. SJR-B-T would substantially reduce competition in the wireless market, Rogers says.

Toronto-based Rogers, which announced its landmark deal to acquire Calgary-based Shaw in March, 2021, on Friday filed its response to the Competition Bureau’s attempt to block the merger, which would unite Canada’s two largest cable companies. The watchdog has argued in documents filed with the Competition Tribunal that the merger would result in higher prices, poorer service and fewer choices for consumers, particularly for mobile phone services.

Rogers says the competition watchdog has failed to properly assess the effects of the deal on competition, “which are in fact minimal to none,” and to weigh them against the economic efficiencies the deal would create. Under Canadian competition law, companies can argue that the cost savings a contested merger would create by allowing them to combine resources and cut staff would be greater than the harm to consumers from reduced competition.

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“The commissioner cannot establish that the transaction will result in a substantial lessening of competition in wireless services, and any alleged impact on competition is far outweighed by the transaction’s efficiencies,” Rogers said in its filing, referring to cost savings from combining the telecoms’ networks, real estate assets and network equipment. Rogers and Shaw have said they could achieve $1-billion in synergies by merging.

Rogers is asking the tribunal to dismiss the bureau’s application to block the merger, or issue an order allowing it to go through subject to the sale of Freedom Mobile to a third party. Rogers is also seeking costs.

In its own documents filed with the tribunal on Friday, Shaw says the bureau’s move to block the merger is based on “fundamental misconceptions” about Shaw’s business, as well as “unsubstantiated assertions” about the Canadian telecom industry.

The bureau’s case focuses on potential harm to Canada’s wireless industry if Rogers were permitted to acquire Shaw’s Freedom Mobile, the country’s fourth-largest wireless carrier.

Rogers has vowed to sell all of Freedom Mobile – including its wireless licenses, retail stores, cellphone towers and customer accounts – and is in the midst of a sale process. “A divested Freedom would have the same or greater economic incentive to compete as it had when owned by Shaw,” Rogers said in its filing.

However, Rogers said the competition bureau “insists that no aspect of the transaction can proceed, regardless of what divestiture Rogers and Shaw propose and regardless of the benefits to Canadians and the Canadian economy that will be lost as a result, adding: “The Commissioner’s position is unreasonable.”

Commissioner of Competition Matthew Boswell has said none of the proposed sale agreements Rogers has put in front of regulators would maintain wireless competition. Mr. Boswell said in the documents that none of the potential buyers are likely to provide Freedom Mobile with the same level of financial, managerial or technical support as Shaw.

Although details of those proposed agreements are redacted in the bureau’s filings, The Globe has previously reported that Xplornet Communications Inc. owner Stonepeak Infrastructure Partners and a consortium that includes the Aquilini family, owner of the Vancouver Canucks, are among the potential buyers that Rogers has presented to regulators. More recently, Rogers has entered into negotiations with Quebecor Inc., owner of Montreal-based telecom Videotron Ltd.

The bureau has also argued that separating Freedom from Shaw’s cable network would reduce the carrier’s ability to compete because it would not be able to cross-sell or offer bundled services.

Shaw countered that those concerns are “wholly misplaced.” Freedom, which was formerly called Wind Mobile, was a stand-alone business when Shaw acquired it in 2016, and Shaw has continued to operate it as such, the company said.

“Contrary to the commissioner’s allegations, Freedom Mobile’s success under Shaw’s ownership has not depended on ‘leveraging’ Shaw’s wireline assets. Indeed, Freedom Mobile has been most successful in Ontario, where Shaw does not have any retail outlets or [network] assets to leverage as well as no wireline customers within its wireless footprint,” Shaw states in its filing. (Wireline includes both internet and television services.)

Shaw said that combining with Rogers would give it “the scale, assets and capabilities needed to compete in Canada’s dynamic and rapidly changing communications industry.”

Freedom has more than 1.7 million subscribers in Ontario, Alberta and British Columbia, and has been credited with driving wireless competition in recent years.

The Competition Bureau has 14 days to reply to the filings from Rogers and Shaw.

The watchdog had also filed a separate application seeking a temporary injunction to prevent Rogers and Shaw from closing the deal. On Monday, the bureau announced that Rogers and Shaw have agreed to delay the closing until they reach an agreement with the Commissioner of Competition or win the challenge in front of the Competition Tribunal.

Rogers’s takeover of Shaw also requires approval from the Ministry of Innovation, Science and Economic Development, which oversees the transfer of wireless licences.

Rogers and Shaw have said that they hope to reach a settlement to avoid a hearing in front of the Competition Tribunal, but are prepared to oppose the commissioner’s application at a hearing.

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