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A year and a half in the making, here’s how Rogers' plan to take over Shaw has evolvedDADO RUVIC/Reuters

Two telecom giants just finished facing off against Canada’s anti-competitive watchdog in the biggest case ever heard by the Competition Tribunal.

Canada’s competition regulator fought for a full block of Rogers Communication Inc.’s proposed $26-billion takeover of Shaw Communications Inc., arguing that a takeover deal between two of Canada’s largest cable companies would reduce competition and result in higher cell phone bills, poorer service, and less choice for consumers.

Following the Competition Tribunal’s dismissal of the challenge on Dec. 29, the Competition Bureau appealed the decision, arguing that the tribunal made legal errors in its rush to issue a judgment before the year’s end. The Federal Court of Appeal dismissed the challenge of the proposed takeover on Jan. 24, bringing the deal a major step closer to the finish line.

The lengthy hearing was the latest stage of a deal that’s been a year and a half in the making. Here’s how the Rogers-Shaw takeover deal has evolved, the controversies around it, and why the Competition Bureau opposed it.

What does a Rogers-Shaw deal have to do with Freedom Mobile and Quebecor?

Canada’s telecom landscape is relatively small: Rogers, Telus, Bell, Shaw and Quebecor are the main providers in the country. Rogers and Shaw own non-competing cable and internet businesses on opposite sides of the country. On the mobile wireless front, Rogers, Telus and Bell dominate the market, with Shaw’s Freedom Mobile following as Canada’s fourth-largest carrier.

In order to avoid eliminating a wireless competitor, and hoping to address the Competition Bureau’s concerns, Rogers and Shaw agreed to sell Shaw’s Freedom Mobile to Quebecor’s Videotron as part of the deal in June.

The deal would allow Quebecor to acquire Freedom’s 1.7 million customers, and would transform the Montreal-based company, which has 22 per cent of Quebec’s wireless market, into a national wireless platform with customers in Ontario, Alberta, and B.C. Rogers would retain 450,000 Shaw Mobile subscribers in Alberta and B.C., because Quebecor and other potential buyers of Freedom refused to bid on the division.

In January 2023, independent internet provider TekSavvy asked the Canadian Radio-television and Telecommunications Commission (CRTC) to review the business arrangements between Rogers and Videotron as part of the takeover, claiming the deals violate the Telecommunications Act and could stifle competition through price discrimination.

Why does the Competition Bureau want to block the takeover deal?

Despite Rogers and Shaw agreeing to sell Freedom Mobile to a competitor, the Competition Bureau opposed the takeover deal.

On the first day of the hearing in the Competition Tribunal, the agency argued that Freedom would come out of a sale as a weakened competitor because Rogers would acquire a number of Shaw’s assets such as infrastructure and personnel. The deal would make Quebecor reliant on its competitor as a supplier, opening the door for anti-competitive behaviour and weakening consumer rights, says the agency.

Why did the Rogers-Shaw takeover deal end up in court?

In March 2021, Rogers announced its plans to buy Shaw for $26 billion. In order for such a deal to go through, it needs to be approved by the CRTC, the Ministry of Innovation, Science, and Economic Development, and the Competition Bureau.

In March 2022, the deal was approved by the CRTC with some conditions attached. The conditions set out by the regulator would require Rogers to pay $27.2-million to the Canada Media Fund, which finances the creation of Canadian content, the Independent Local News Fund, which supports independent television stations in producing local news, and specific independent production funds, such as the Rogers Documentary Fund and the Shaw Rocket Fund.

In October, Canada’s Minister of Innovation, Science and Industry Francois-Philippe Champagne laid out strict conditions needed for his department to approve the deal. His conditions include that Quebecor agree not to sell Shaw’s wireless spectrum licenses for at least 10 years, and that it commits to bringing down cellphone bills outside of Quebec. It’s not clear how any pledge relating to wireless prices would be enforced.

The Competition Bureau, unlike the CRTC and Ministry, pushed for a full block of the proposed deal. Before heading to the Competition Tribunal, Rogers, Shaw, and the agency entered confidential mediation talks. The mediation failed to resolve the Competition Bureau’s objections to the deal, sending the deal to the tribunal hearing.

The Competition Tribunal dismissed the Competition Bureau’s challenge on Dec. 29, saying that the sale of Shaw’s Freedom Mobile to Videotron would create a “more aggressive and effective” wireless competitor. The Competition Bureau appealed the tribunal’s decision but was dismissed on Jan. 24, bringing the deal a major step closer to the finish line.

Shares of Shaw shot up 2.8 per cent in the afternoon following the federal court’s decision, trading to $39.50 on the Toronto Stock Exchange.

The final approval for a takeover now rests with Mr. Champagne, whose department is reviewing the transfer of Shaw’s wireless licenses to Videotron.

In January 2023, the House industry and technology committee, which recommended against the deal in a report published in March of 2022, said it planned to take another look at the takeover, now involving the divestiture of Freedom Mobile to Quebecor. The committee’s recommendations are non-binding but could put pressure on Mr. Champagne, whose approval is required for the deal to close.

With files from Alexandra Posadzki and Irene Galea.