Regulators should reject BCE Inc.'s $3-billion takeover of Astral Media because the telecommunications giant has the "incentive and ability to act anti-competitively," opponents of the deal argued in front of Canada's broadcast regulator Tuesday.
The Public Interest Advocacy Centre made the comments on the second day into a week-long hearing into the deal. BCE and Astral presented its reasoning to the Canadian Radio-television and Telecommunications Commission on Monday, and both supporters and opponents will spend the rest of the week making their case for or against the deal.
The companies argued they need to merge their television holdings to address the threat presented by online services such as Netflix, and that by combining the companies' radio stations it would be better able to attract advertising and share resources among stations.
But PIAC, a non-profit consumer group, argued Tuesday that the merged company would be too large, and would be able to manipulate the market by "requesting commercially unreasonable rates or imposing restrictive conditions that undermine a competitor's ability to offer better prices or innovative packages" when selling its channels such as TSN to competing television providers.
This would lead to higher prices for consumers, PIAC argued, and should be reason enough for the deal to be rejected outright.
"Bell's version of the public interest envisions a bigger Bell that provides more Bell services and content to consumers on Bell platforms – or on a competitor's platform, but at Bell's price and on Bell's terms," said Janet Lo, PIAC's legal counsel. "But we believe Canadians and the public interest deserve better and that more is not always better."
Rogers Communications, a large competitor that buys content from BCE's Bell Media division, said in its presentation that Bell is charging the cable company 5-to-10 times market rates to offer content from its speciality and conventional channels on its TV Anywhere online platform.
"The fees Bell Media is demanding for accessing these multiplatform rights substantially exceed the rates we pay to other content suppliers," said Pam Dinsmore, regulatory vice-president at Rogers. "If we accept that offer, Bell Media will be rewarded with unreasonably high fees for its ancillary content. Our refusal, however, will mean that we face the prospect of not being able to offer our customers access to Bell Media's premium content and, as a result, we will be competing at a significant disadvantage against Bell TV and Bell Mobile on non-linear platforms."
BCE executive vice-president Mirko Bibic dismissed Rogers' concerns, arguing that Rogers pays about the same amount for content from Astral and hasn't tried to get a better price.
"Rogers has not made us a counter-offer," he told The Globe and Mail. "It's clear they would rather have regulatory intervention supersede market negotiation. Rogers can certainly bring a formal complaint to resolve TV Everywhere pricing, but they would need to bring forward some real evidence. So far, they've offered none."
The CRTC rejected an earlier version of the deal last year, largely because of concerns over market dominance and a lack of benefits for the Canadian consumer, but CRTC chairman Jean Pierre Blais emphasized that decision would have no effect on this hearing.
This time, BCE is divesting assets to lower its market concentration. The companies have struck deals to sell off some of their English-language television channels, such as Teletoon and Disney XD, to reduce their combined market share; BCE will sell 10 radio stations; and the company made a promise about keeping its head office in Montreal.
The Competition Bureau has approved the reorganized deal, but it still hinges on the CRTC's approval. BCE will be allowed to make a closing statement Friday, in which is can respond to any claims made by opponents.