The federal Competition Bureau is "increasingly concerned" that BCE Inc.'s $3.4-billion purchase of Astral Media Inc. would put too much power in the hands of one broadcaster, with the watchdog saying it could strike down the deal even if broadcast regulators allow it to proceed.
Competition Commissioner Melanie Aitken said her office paid close attention to the testimony last week as a parade of executives and individuals appeared before the country's broadcast regulator at a hearing examining whether the deal would ultimately benefit Canadians.
She's not convinced. While all of the bureau's investigations are done behind closed doors, Ms. Aitken warned she has concerns that go beyond her standard duty to review every large transaction.
"We are watching closely," said Ms. Aitken. "There have been a lot of complaints during the course of our review and we are increasingly concerned about vertical integration and its effect on competition."
If the deal were to proceed, it would leave Bell Media with control of more than 100 radio stations and 90 television channels. But that is only part of the story – its competitors said during a week-long hearing before the Canadian Radio-television and Telecommunications Commission (CRTC) that the bigger concern is Bell's level of vertical integration, referring to the company's ownership of both the content, such as TSN, and the infrastructure needed to deliver it into homes.
The deal would see Bell Media in control of many of the country's top specialty channels – such as Astral's HBO and The Movie Network – leaving competitors such as Rogers Communications Inc. and Quebecor Inc. concerned Bell will overcharge them to provide those services to their subscribers and cost them customers.
Bell says it needs to do the deal to keep the cost of content down for everyone, and to fend off an imminent onslaught of unregulated services such as Netflix which it says are an existential problem for every cable satellite company in the country.
"The benefits will flow from the execution of Bell's strategic vision, a strategy built on unprecedented investment in Canada's best content and on the world-class network infrastructure that will deliver it to Canadians on all four screens: TVs, laptops, smartphones and tablets, a strategy to increase choice for consumers in a very competitive marketplace," BCE chief executive officer George Cope said on the first day of the hearing.
The CRTC said Friday it could take as long as 45 days before it decides whether the deal can proceed. The commission has several choices: it could say yes; say yes, with amendments; or reject the merger outright. The Competition Bureau has similar power, and operates independently from the CRTC. That means the deal could be killed even the broadcast regulator is satisfied it would improve Canada's broadcast industry.
The bureau – which was handed new powers by the federal government in 2009 that allowed it to become more aggressive toward anti-competitive behaviour – has taken on some of the country's biggest companies under Ms. Aiken's tenure, which comes to an end on Friday.
Last week, the bureau filed charges against three of the country's largest cellphone providers alleging they allowed third-parties to trick cellphone subscribers into signing up for expensive text services and then took up to 60 per cent of the profits.
Ms. Aitken first voiced her concern about Bell's plans in August when she approved the sale of Maple Leaf Sports and Entertainment to a partnership between BCE Inc. and Rogers Communications. She said her concerns persist, and her departure won't have any bearing on the files currently in front of the bureau.
"This is complex transaction," said Ms. Aitken. "It troubles a lot of people."
Editor's note: The number of radio stations Bell Media would control if the deal is approved has been corrected in the online version of this story.