Rogers Communications Inc. RCI-B-T and Shaw Communications Inc. SJR-B-T have agreed not to close their $26-billion merger until they either reach a deal with the Commissioner of Competition or win a challenge in front of the Competition Tribunal.
Matthew Boswell, the Commissioner of Competition, has filed an application to block the merger of the country’s two largest cable networks, arguing the takeover has already reduced competition for wireless services and would result in higher cellphone bills.
The Competition Bureau’s case focuses on potential harm to Canada’s wireless sector if Rogers were permitted to acquire Shaw’s Freedom Mobile, the country’s fourth-largest wireless carrier, which has been credited with driving wireless competition in recent years.
Rogers has committed to selling all of Freedom Mobile and is in the midst of a sale process for the carrier, which has about two million customers in Ontario, Alberta and British Columbia. Rogers and Shaw said in a joint statement Monday the sale process is advancing.
Toronto-based Rogers has held talks with a number of potential suitors, including Quebecor Inc., which owns Montreal-based telecom Videotron Ltd., The Globe and Mail previously reported. Other bidders that have expressed interest in the carrier include Toronto’s Globalive Capital, Xplornet Communications Inc. owner Stonepeak Infrastructure Partners and the Aquilini family, who own the Vancouver Canucks.
Rogers and Calgary-based Shaw have also agreed to the bureau’s request for an expedited hearing in front of the tribunal, the watchdog said in a news release Monday. The bureau said Mr. Boswell sought the expedited hearing because of the harm he alleges the deal has already done to wireless competition.
In documents filed with the tribunal, Mr. Boswell argued Shaw has stopped competing for mobile phone business ahead of the takeover, reducing its wireless network investments, and its marketing and promotional activity.
Under Canadian competition law, companies are free to close a deal after a period of time has elapsed. However, the Rogers-Shaw merger also needs approvals from two additional regulators – the Canadian Radio-television and Telecommunications Commission (CRTC) and the Department of Innovation, Science and Economic Development Canada (ISED).
The CRTC has already approved the takeover with some conditions attached, while ISED is still reviewing the transfer of Shaw’s wireless licences.
Speaking at TD Securities’ telecom and media conference last week, Rogers chief executive officer Tony Staffieri called the temporary injunction, for which Mr. Boswell had filed a separate application, “a bit academic,” as the companies are unable to close the deal without ISED’s approval.
Rogers and Shaw said in a joint statement Monday that agreeing to the injunction allows them to focus on addressing the Competition Bureau’s concerns with the deal in the hopes of reaching a settlement. The telecoms said they believe reaching a settlement and avoiding a tribunal hearing is the “best path forward.”
If the matter does go before the tribunal, Rogers and Shaw plan to oppose the commissioner’s application, the companies said. A schedule for the expedited hearing should be announced soon, the companies added.
Mr. Boswell said in a statement competition is necessary to maintain affordable, high-quality wireless services.
“I’m pleased this case can now move quickly towards a hearing before the tribunal. Our objective remains to protect Canadians by preserving competition and choice in Canada’s wireless market,” Mr. Boswell said.