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The Competition Bureau says it is seeking to block Rogers Communications Inc.'s proposed $26-billion acquisition of Shaw Communications Inc.Sean Kilpatrick/The Canadian Press

None of the proposed deals for the sale of Shaw Communications Inc.’s SJR-B-T Freedom Mobile are sufficient to maintain competition in the wireless industry, Canada’s competition watchdog says.

Toronto-based telecom giant Rogers Communications Inc. RCI-B-T is looking to sell Shaw’s Freedom Mobile, Canada’s fourth-largest wireless carrier, to gain regulatory approval of a proposed $26-billion takeover of Calgary-based Shaw.

However, Commissioner of Competition Matthew Boswell is taking issue with the potential buyers that Rogers has put in front of regulators, saying in documents filed with the Competition Tribunal that they are unlikely to provide Freedom Mobile with the same level of financial, managerial or technical support as Shaw.

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On Monday, the competition watchdog applied to the tribunal to block the merger of the country’s two largest cable networks. The Competition Bureau said in support of that application that Shaw has already stopped competing for mobile phone business since the merger deal was struck.

The bureau is also requesting an injunction to prevent the telecom companies from closing the deal until the application can be heard.

The move by the competition watchdog is a major setback for the cable takeover, which would reshape the country’s telecom landscape. Rogers and Shaw have said they need greater scale to move quickly on the rollout of 5G wireless services and to compete effectively against global streaming giants. The companies have vowed to oppose the bureau’s application.

The Competition Bureau, meanwhile, argues that Shaw and Rogers are close competitors in the wireless market and that the merger, even with the sale of Freedom to a new owner, would result in higher cellphone bills.

Details of Rogers’ proposed agreements to sell Freedom Mobile are redacted in the documents, which were posted to the Competition Tribunal’s website on Tuesday. The Globe has previously reported that Stonepeak Infrastructure Partners, a New York-based private equity fund that owns rural internet provider Xplornet Communications Inc., is among the potential buyers that Rogers has presented to regulators.

On Tuesday, The Globe reported that Rogers has also presented regulators with an offer from a consortium that includes British Columbia First Nations, the LiUNA Pension Fund of Central and Eastern Canada, infrastructure investor Fengate Asset Management and the Aquilini family, which owns the Vancouver Canucks.

Other suitors that have expressed interest in the carrier include Quebecor Inc., which owns Montreal-based telecom Videotron Ltd., and Freedom Mobile founder Anthony Lacavera.

The competition watchdog says that, under the proposals Rogers has put forward, Freedom would face “substantially greater hurdles” to expanding its network and rolling out 5G than it would have under Shaw’s ownership.

Separating Freedom Mobile from Shaw’s network infrastructure would reduce the carrier’s ability to offer bundled services, the regulator said.

The carrier also sat out the most recent federal auction for wireless airwaves, putting it in a “disadvantageous position for future expansion,” the regulator said. If it is sold, “Freedom will require the infusion of substantially greater investment in order to successfully deploy a 5G network compared to that required by Shaw in the absence of the merger,” Mr. Boswell said.

However, BMO analyst Tim Casey noted that Shaw put itself up for sale because it does not wish to keep investing in its wireless business. “We believe an outright rejection of this deal would not satisfy the government’s position of a four-player market,” Mr. Casey wrote in a research note on Sunday.

Rogers and Shaw said in statements on Monday that they remain committed to closing the deal and are working toward selling Freedom Mobile in its entirety.

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