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It is now almost 22 months since Rogers announced its $26-billion takeover bid for Shaw – and the fact it’s taken so long to assess the deal is a clear reflection of the precarious state of competition in the telecom business.

What matters for consumers is price and service. While Canada’s wireless companies boast of their networks’ quality, high prices have long irked customers. The good news is the cost of wireless bills has finally started to decline over the past several years, from lofty levels. Last October, amid soaring inflation, they were down 6.3 per cent from a year earlier, according to Statistics Canada.

A big part of the reason is that individuals and businesses usually have a choice of four providers. Last January, the Competition Bureau reported that the Big Three of Rogers, Bell and Telus made high profits compared with their peers in other countries. But if there is a fourth player – such as Shaw’s Freedom Mobile in Ontario, British Columbia and Alberta, SaskTel in Saskatchewan, or Videotron in Quebec – prices can end up lower by a third.

That’s why the Rogers’ takeover of Shaw as proposed in early 2021 had an unacceptable flaw: It made no sense that Rogers should scoop up Freedom Mobile. It took a long time – more than a year – for Rogers to acknowledge this reality but it finally did in mid-2022 when it agreed to sell Freedom for $2.85-billion to Quebecor’s Videotron arm, which had a wireless market share of about 20 per cent in Quebec and was looking to expand.

By that point, however, the Competition Bureau sought to block the deal in its entirety. Mediation with the companies thereafter failed and the case was heard in late 2022 at the Competition Tribunal. The bureau argued the deal would result in higher prices for Canadians and insisted the Quebecor plan was an inadequate answer.

Last week, the tribunal dismissed the bureau’s case. The tribunal focused on the revised proposal, with the Freedom sale, and concluded that competition would not be weakened. The tribunal in fact cited Videotron’s track record – “aggressive pricing and innovation in Quebec” – as evidence that it could win market share from the Big Three.

The decision, effectively, is the least-bad outcome. First, Shaw appears to have given up on wireless. The company was late to the market and did not seem keen to invest a lot more money in 5G networks to keep up with the Big Three.

Second, the proposed deal raised the perennial question about Canada’s strict restrictions on foreign ownership in telecom, the opposite of many countries. There have been calls to ease the rules but both Conservative and Liberal federal governments have left the main restrictions in place. One certainty is that an open market is no guarantee of broader competition: In the United States and Germany, where there’s a mix of domestic and foreign players, wireless is dominated by a Big Three.

Third – and happily – Quebecor appears hungry to compete, and to invest in building a 5G network. A combined Videotron-Freedom would have about 3.5-million customers – roughly a third of each of the Big Three, and about double that of Freedom under Shaw. But Shaw is a considerably larger company than Quebecor, measured by market value and assets. Success is not certain, as the Competition Bureau argued. Still, compared with the original deal or other scenarios, the outcome could have been worse. Further, in the long interregnum since Rogers first made its move, competition has suffered, with Freedom in limbo. Some kind of decision, at long last, was necessary.

The bureau continues to fight, taking its loss to the Federal Court of Appeal, set for Jan. 24. This space has praised the bureau’s new muscular approach to advocate for consumers, and opposing Rogers-Shaw was important, in a country where takeovers are not often seriously questioned. The bureau’s appeal alleges the tribunal made legal errors, in its consideration of the Videotron deal alongside the main takeover. This gets into technical details and while they are important, they are not as important to Canadians as the future state of play in telecom. The appeal won’t change reality.

Beyond the courts, one final approval is pending, from Ottawa. Industry Minister François-Philippe Champagne has said he expects Videotron to offer deals in Ontario and the west similar to those in Quebec, where its prices on average are 20 per cent lower than in other provinces. Quebecor agreed. Ottawa has to make sure the promise is kept.

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