Canada’s takeover laws should halt mergers that 'harm the public interest as quickly and expeditiously as possible,' the head of the Competition Bureau said.Adrian Wyld/The Canadian Press
The head of the Competition Bureau made the case for reforms to Canada’s takeover regulations on Thursday, arguing consumers, businesses and the economy are suffering under the current “complex and unpredictable system.”
Commissioner of Competition Matthew Boswell said a federal review that began in February needs to overturn rules that have allowed a handful of domestic companies to dominate their sectors. He highlighted the need to change what is known as the “efficiencies” defence, which companies use to justify a takeover that the regulator is challenging. That uniquely Canadian approach allows mergers to go forward because they offer overall savings to the economy, even if they lessen competition and hurt consumers.
“Current provisions enable high levels of economic concentration – even monopolies – in the Canadian economy. This is out-of-step with what other comparable countries are doing,” said Mr. Boswell in a speech to the Canadian Bar Association in Ottawa.
Canada’s takeover laws should halt mergers that “harm the public interest as quickly and expeditiously as possible,” said Mr. Boswell, while allowing the “the vast majority of mergers that do not harm the public interest to proceed as quickly as possible.”
Mr. Boswell gave the speech a week ahead of the bureau’s scheduled mediation talks with Rogers Communications Inc. RCI-B-T, Shaw Communications Inc. SJR-A-X and Quebecor Inc. QBR-B-T The three companies are looking for approval of deals that would unite Rogers and Shaw in a $26-billion merger, while seeing Shaw’s Freedom Mobile cellphone network sold to Quebecor for $2.85-billion.
The bureau opposes the transactions, arguing they will result in higher cellphone service prices. The three companies argue the deals will create four national service providers – Rogers, Quebecor, Bell parent BCE Inc. BCE-T and Telus Corp. T-T – and result in lower prices and increased accessibility.
If the deal is approved, Quebecor would double the size of its subscriber base to four million customers and expand from its home market of Quebec into Ontario, Alberta and B.C. In a report last week, analyst Maher Yaghi at Scotiabank said Quebeckers now enjoy the lowest cellphone charges in Canada and if Quebecor is allowed to buy Freedom, prices should decline in other provinces.
On Thursday, Mr. Boswell said the bureau and government are focused on speeding up a slow and cumbersome takeover approval process. He said while no one party is to blame, “I view this as an overall systemic failure. And I think it is a pernicious one, because it contributes to a sense of apathy among complainants, consumers and general public.”