Competition again in question in Canada as Rogers and Shaw deal deadline looms

Law court crime punishment

Rogers and Shaw appear to be on the brink of getting the go-ahead for their controversial merger deal, but once again the establishment in Canada faces a barrage of criticism over competition in telecoms.

The Canada Competition Bureau this week failed in its latest attempt to overturn the deal, leaving the final decision in the hands of Innovation, Science and Industry Minister François-Philippe Champagne, who seems minded to let it go ahead. Meanwhile, a fairly inconsequential spectrum auction in the country serves to highlight what the detractors are complaining about: the fact that the Canadian mobile market favours the big players.

The Competition Bureau threw in the towel this week after the Federal Court of Appeal dismissed its appeal against the C$26 billion acquisition of Shaw that Rogers announced almost two years ago. It had objected to the Competition Tribunal’s approval of the merger, which passed it on the grounds that it was unlikely to lead to higher prices or poorer service.

“Although today’s developments are discouraging, we stand by the findings of our investigation and the decision to challenge the merger. We brought a strong, responsible case to the Tribunal after conducting a thorough examination of the facts,” the Bureau said in a statement on Tuesday. “We continue to disagree with the Tribunal’s findings in this case. That being said, we accept the decision of the Federal Court of Appeal and we will not be pursuing a further appeal in this matter.”

Rogers and Shaw must have been tempted to crack open the Champagne at that point, but they still need to wait for the minister of the same name to pass judgement. Part of that process will see him make a call on whether to allow the transfer of Shaw’s mobile licences to Videotron parent Quebecor, as per the sale agreement for Shaw’s Freedom Mobile arm, which was brokered last year essentially as a concession to competition.

Champagne said he will have a closer look at the appeals court’s decision and make his own mind up “in due course,” the Globe and Mail reported. “That’s what I’m going to be reflecting on – what are the expectations that I can demand that would ensure competition, that would ensure…affordability,” it quoted the minister as saying.

That comment suggests that the minister will green light the move, albeit with concessions. The news outlet points out that Champagne has previously indicated he would expect Videotron to hold Shaw’s mobile licences for at least 10 years and to commit to reducing mobile bills outside of Quebec, its core market.

The Globe and Mail also shared details of a parliamentary hearing on Wednesday, at which MPs peppered the telcos with questions on the potential impact of the deal, looking at areas including job losses and rising bills, as well as querying whether Videotron is the right player to pick up Freedom Mobile. By all accounts, there were strong words shared on both sides of the argument.

The lack of real competition in Canada has been an issue for many years, and even with concessions it is likely that this deal will help the big operators maintain their dominant position. It will certainly appear that way.

Canada has been talking a good game on competition for some time. Once again, this week the government talked up competition and affordability in the market as it sold off another raft of spectrum. This was not a big spectrum auction but rather the sale of residual frequencies in the 600 MHz, 2.5 GHz and 3.5 GHz bands that brought in C$29.97 million for state coffers. Nonetheless, the results were quite telling.

“In total, 27 licences were awarded to 6 Canadian companies, many covering rural and remote areas. This includes 13 licences awarded to small and regional providers across the country,” the Innovation, Science and Industry Ministry announced. “In addition to encouraging competition, the results of this auction will improve Canada’s high-quality networks in areas covered by these licences.”

Buried deeper on the ministry’s website were the actual results, which showed that incumbent Bell accounted for more than a third of the auction spend, picking up C$10.6 million worth of frequencies, while Videotron came in second at C$9.9 million and Rogers was also one of the bigger spenders.

There are smaller players on the list, and this auction can hardly be viewed as a microcosm of the whole industry. But, if it walks like a duck…

Anyway, the Rogers/Shaw deal apparently has a 31 January deadline for completion, something the Canadian government is clearly well aware of, so we’ll likely hear something from Champagne in the very near future.


Get the latest news straight to your inbox. Register for the newsletter here.

Tags: , ,

Leave a comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.