Rogers Shaw acquisition approved but it’s still not a done deal

The Canadian Competition Tribunal has decided Rogers and Shaw have conceded enough to be allowed to merge but the Competition Bureau is fighting on.

It has been almost two years since two of Canada’s biggest telcos announced their mega M&A plans, which were always going to draw close scrutiny from competition authorities. The biggest sticking point was consolidation of the Canadian mobile sector through Rogers getting hold of Shaw-owned Freedom Mobile, so the two companies pledged to flog it to smaller MNO Videotron in the hope that would resolve that concern.

After a further few months of digesting this apparently obvious and straightforward concession the Canadian Competition Tribunal published its decision that, so long as Shaw completes its disposal of Freedom Mobile first, the acquisition can now go ahead. It reckons the resulting telecoms market would still be nice and competitive and thus no worse for consumers.

“In the course of making this determination, the Tribunal rejected various allegations made by the Commissioner of Competition in support of several propositions, including that: (i) Shaw’s divestiture of Freedom to Videotron would result in Freedom being a less effective competitor than it was immediately prior to the announcement of the Merger; (ii) Rogers’ acquisition of Shaw Mobile would likely give rise to anti-competitive unilateral effects; and (iii) the Merger and Divestiture would likely facilitate the exercise of collective market power by Rogers, Bell, and Telus,” said the announcement.

The last of those points seems the most compelling, since event the combined Freedom and Videotron would have much fewer subscribers than the big three. Unsurprisingly, the Commissioner of Competition, Matthew Boswell, wasn’t happy about the decision and issued the following terse statement. “I am very disappointed that the Tribunal is dismissing our application to block the merger between Rogers and Shaw. We are carefully considering our next steps.”

While the Competition Bureau hasn’t published any further press releases on the matter, The Canadian Press reports it has managed to secure an emergency stay from a federal court that still prevents the acquisition from completing until the Bureau’s appeal of the Tribunal’s decision is heard. Hilariously, the Bureau apparently accuses the Tribunal of a ‘rush to judgment’, implying it intends to take its time over the appeal.

In response to the Bureau’s continued resistance, Rogers and Shaw issued the following joint statement. “We remain committed to these pro-competitive transactions that will bring more choice, more affordability and more connectivity to Canadians. The Tribunal’s decision was the right one, and the Tribunal was clear in its summary that the transactions we have proposed are not likely to substantially lessen competition in Alberta and British Columbia. Instead, as the Tribunal found, the transactions will likely result in an intensifying of competition. We are deeply disappointed that the Commissioner continues to attempt to deny Canada and Canadians the advantages that will come from these proposed transactions.”

It’s hard to tell from the above statements who is the more disappointed. Our gut-feel is that ‘deeply’ outranks ‘very’ on the scale of qualifiers for that popular expression of passive aggression, but there really should be some kind of international standard. Our advice for the eventual loser of this process would be to consult a thesaurus to avoid any possibility of their disappointment being underplayed.

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