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A woman holds two cellphones in this photo illustration, March 29, 2021 in Chelsea, Que.Adrian Wyld/The Canadian Press

A House of Commons committee is recommending against Rogers Communications Inc.’s proposed $26-billion takeover of Shaw Communications Inc. and urging the federal government to prioritize affordability as it reviews the deal.

A report from the industry and technology committee tabled on Friday said that if the merger goes forward, the government must ensure that all of the conditions attached are enforceable. It also urged Ottawa to give priority to the concerns of consumers in its review of the transaction, for example, by requiring Rogers to sell Shaw’s wireless business, Freedom Mobile.

Although the report’s recommendations are non-binding, they add to growing political concerns about the takeover, which could reduce the number of wireless players from four to three in Ontario, Alberta and British Columbia.

Federal Industry Minister François-Philippe Champagne said on Thursday that “the wholesale transfer of Shaw’s wireless licences to Rogers is fundamentally incompatible with our government’s policies for spectrum and mobile service competition, and I will simply not permit it.” However, Mr. Champagne’s statement left the door open to allowing some of Shaw’s wireless licences to be transferred to Rogers.

The report is “both a recommendation against the merger and also an acknowledgement of the reality that if it proceeds, we want to make sure that there are strict conditions attached,” said Nathaniel Erskine-Smith, a Liberal Member of Parliament who sits on the committee, in an interview. The committee comprises MPs from the Liberal, Conservative and New Democratic parties and the Bloc Québécois.

Mr. Erskine-Smith said that Shaw publicly stated in December, 2020, that competition from regional players such as its Freedom Mobile carrier is crucial to making wireless services more affordable.

“And then mere months later, they’re suggesting the merger won’t have an impact on competition and affordability and is perfectly acceptable. These are obviously contradictory statements, and the first statement was made without the self-interest of a deal on the table,” Mr. Erskine-Smith said.

A spokesperson for Rogers referred back to a joint statement Rogers and Shaw issued on Thursday, which said the companies are working constructively with regulators and expect the deal to close in the first half of this year.

“We share the government’s view that affordable, high-quality services should be available to every Canadian, and by coming together, Rogers and Shaw will make the generational investments in networks and technology that Canada needs to create new jobs, increase competition, and bridge connectivity gaps in rural and remote areas,” the statement read.

Three federal bodies are reviewing the transaction – the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC) and the Ministry of Innovation, Science and Economic Development.

Rogers and Shaw have said that combining forces would allow them to compete more effectively against Telus Corp. and BCE Inc.’s Bell Canada, which share parts of their cellular networks. Rogers and Shaw have also said the merger would help them build networks in hard-to-reach areas, pledging $1-billion to connect rural, remote and Indigenous communities in Western Canada to high-speed internet, among other commitments.

However, the committee said it was not convinced by the telecoms’ arguments regarding the merits of the merger. It believes a number of the commitments that Rogers has linked to the merger are unenforceable, including promises to rural regions, the report says.

“They are effectively telling us that, despite all of the available evidence telling us that strong regional competition is critical … that, in fact, consolidation will benefit consumers,” Mr. Erskine-Smith said. “We know across sectors that consolidation is contrary to the interests of consumers and what we need is strong competition,” he added.

Quebecor Inc.’s chief executive officer, Pierre Karl Péladeau, who has expressed interest in buying Freedom Mobile if it were put up for sale, said he is “pleased to see that the committee’s members agree that we need real competition in wireless and that a strong, independent fourth player would benefit Canadians.”

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