Rogers Communications Inc. is pushing back against Canada’s competition watchdog within the first day of a weeks-long listening to on its $26-billion proposed takeover of Shaw Communications Inc., arguing that the deal is “pro-competitive.”
Earlier within the day, the regulator bolstered its opposition to the takeover and intention to completely block it.
In the Competition Bureau’s opening arguments Monday, it reiterated its place that the deliberate sale of Shaw-owned wi-fi service Freedom Mobile to Quebecor Inc.’s Videotron Ltd. shouldn’t be sufficient to eradicate its considerations that the broader merger would result in worse companies and better costs for customers.
The sale of Freedom Mobile to Videotron would see Quebecor purchase all of Freedom’s branded wi-fi and web prospects in addition to all of Freedom’s infrastructure, spectrum and retail areas in a transfer that may broaden Quebecor’s wi-fi operations nationally. Quebecor agreed to purchase Freedom in a $2.85 billion deal earlier this 12 months.
The regulator stated separating Freedom from Shaw would make it a diminished competitor as a result of it might take away Freedom’s entry to sure shared human sources and synergies the corporate “has loved” as a part of Shaw.
It stated the divestiture wouldn’t change the “vigorous” aggressive presence supplied by Shaw.
The Competition Bureau stated the sale would create a scenario the place Videotron is prone to be extra “aligned” with Rogers and extra weak to anti-competitive actions by Rogers.
Rogers disputed this declare in its opening arguments, saying that dependence on Rogers is “very removed from actuality.”
Rogers stated the Competition Bureau’s view of Videotron is “problematic.” It stated the regulator is underestimating Videotron’s “capacities and talents” and discounting its success in Quebec.
Rogers added that the deliberate sale of Freedom to Videotron would create an “invigorated” competitor within the wi-fi market, and rhetorically requested why Quebecor would select to spend nearly $3 billion to amass a enterprise that’s doomed to fail.
Additionally, the Competition Bureau stated that obstacles for Videotron to enter a brand new market are excessive. Videotron solely operates in Quebec and a small a part of Ontario.
The obstacles embody the problem of buying spectrum, which is scarce and costly, constructing infrastructure, retail distribution, and getting prospects on board, the Competition Bureau stated.
It additionally famous that even with the sale of Freedom, Rogers will nonetheless be buying prospects from Shaw Mobile.
In its opening arguments, Shaw known as the Competition Bureau’s need to forestall the deal from occurring a “dramatic overreach,” including that blocking the deal would set the telecom trade back a era.
Shaw stated Rogers would by no means personal or function Freedom, explaining that Videotron would purchase Freedom earlier than Rogers and Shaw merge.
Shaw added that it has operated Freedom as a standalone firm that may “simply” and “cleanly” be separated and bought.
The firm additionally stated that Videotron would change into a extra viable competitor than Freedom is now, particularly as a result of the sale would enable Freedom to supply 5G companies, which it hasn’t been in a position to do.
In a separate resolution final month, Minister Francois-Philippe Champagne put new situations on the Rogers-Shaw deal, particularly focusing on the sale of Freedom to Videotron.
Champagne — who as minister of innovation, science and trade should approve any spectrum licence switch — left the door open to a revised settlement, saying he had two main stipulations.
He stated Videotron must conform to maintain Freedom’s wi-fi licences for at the very least 10 years.
He additionally stated he would “count on to see” wi-fi costs in Ontario and Western Canada lowered by about 20 per cent, placing them in step with Videotron’s present Quebec choices.
In response, Quebecor stated it might settle for the situations, agreeing to include them in a revised deal.
In its opening arguments, Shaw additionally argued that the Rogers-Shaw deal would increase competition not reduce it, notably in western Canada, as a consequence of Rogers’ dimension, scale and sources being considerably higher than Shaw’s however comparatively equal to Telus, which dominates that a part of the nation, consequently placing Telus and Rogers on equal footing.
The Competition Bureau is certainly one of three regulatory businesses that should approve the deal earlier than it may shut, along with the CRTC and Innovation, Science and Economic Development Canada.
The listening to is predicted to final 4 weeks with oral arguments scheduled for mid-December.
Rogers is hoping to shut the Shaw deal by the tip of the 12 months, with a doable additional extension to Jan. 31, 2023.
This report by The Canadian Press was first printed Nov. 7, 2022.