Rogers Communications Inc. RCI-B-T and merger partner Shaw Communications Inc. SJR-B-T say the sale of their Freedom Mobile wireless division to Quebecor Inc. QBR-B-T should satisfy the antitrust watchdog’s concerns about their union.
In a pair of new documents filed to the Competition Tribunal, Canada’s merger court, Rogers and Shaw maintained that the regulator’s challenges to their proposed $26-billion deal are premised on fundamental misconceptions about the businesses. They argue the sale of Freedom would spur mobile-service competition and have benefits for consumers.
But Jayme Albert, a spokesperson for the Competition Bureau, said in an e-mail Tuesday that it remains firm in its decision to challenge the merger of Rogers and Shaw in order to protect the public interest. The watchdog has argued that the merger of Toronto-based Rogers and Calgary-based Shaw would result in higher prices and fewer choices for consumers, and plans to challenge the deal in a hearing this fall.
Rogers and Shaw first submitted responses to the Commissioner of Competition’s case on June 3, before the companies had finalized the deal to divest Freedom Mobile to Videotron Ltd., a Montreal-based telecom owned by Quebecor. The sale, finalized on Aug. 12, includes all of Freedom’s wireless and wireline subscriptions and its spectrum licences. Tuesday’s revised filings argue the benefits of the Freedom deal.
According to Rogers, under Videotron’s ownership, Freedom would be better placed to compete in wireless services with Bell, Rogers and Telus than it would have been under Shaw’s ownership, given the Montreal-based company’s “history as a disruptive competitor” and ownership of 3.5 GHz spectrum – ideal for supporting fifth-generation, or 5G, cell service.
Further, it added that the acquisition of Freedom would provide Videotron with a “fast, efficient and effective” expansion out of Quebec as a result of fewer network and retail costs. Freedom has more than 1.7 million subscribers in Ontario, Alberta and British Columbia.
In its June 3 response, Rogers noted that the Commissioner’s assertion that Freedom’s ability to compete “vigorously” is dependent on leveraging Shaw’s wireline assets is incorrect, as it ignores that Shaw operates Freedom as a stand-alone business.
“There is little relationship between Freedom and Shaw’s wireline business, and that relationship is conducted on arm’s-length commercial terms,” Rogers said.
The company noted that “the significant majority” of the transaction – the combination of Shaw’s wireline business with Rogers’s wireline and media businesses – will have no anti-competitive effect in those industries as the two companies do not compete in these areas. Wireline service refers to the transmission of information over a physical filament.
After Rogers and Shaw presented regulators with a number of potential buyers, Commissioner of Competition Matthew Boswell insisted that the deal can not go through regardless of whether Freedom was divested, saying no other company would offer the same level of financial or technical support for the telecom as Shaw.
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 declined to comment on the updated response to the tribunal.
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