DADO RUVIC/Reuters
A federal judge has asked Rogers Communications Inc. RCI-B-T and Shaw Communications Inc. SJR-B-T to address proposals from Canada’s anti-competition watchdog to resolve a dispute over their $26-billion takeover deal, suggesting a compromise could be reached before the case heads to an appeal hearing.
Chief Justice Paul Crampton, a Federal Court judge, has been appointed to head the Competition Tribunal panel that will hear an appeal Nov. 7 of the merger of the two telecommunications giants. The Competition Bureau has challenged the merger, arguing it would result in fewer options and increased prices for Canadians.
In a letter to all parties released Monday, Chief Justice Crampton reveals that the Competition Bureau has proposed remedies it wants the companies to make to win its approval for the deal. The letter doesn’t detail what the remedies are, but asks the companies to provide evidence that if they were carried out, the merger would not reduce competition within the Canadian telecommunications sector.
In merger court, a remedy – also known as relief – refers to certain compromises that a company must make to go forward with the deal being proposed, and can include divestitures. While Rogers and Shaw have proposed the divestiture of Freedom Mobile to Quebecor Inc. QBR-B-T as a remedy, the bureau has said it does not consider this an effective solution.
By showing evidence that carrying out the proposed relief would satisfy competition law, Chief Justice Crampton said, it would be possible to “streamline the upcoming trial,” making it unnecessary for the bureau to try to block the merger entirely.
Rogers and Shaw both declined to comment for this story. The Competition Bureau could not immediately be reached for comment.
The companies can reach a settlement with the bureau outside of court at any time, even after the hearings have begun. According to Michael Osborne, a competition lawyer at law firm Cozen O’Connor, the letter from Justice Campton “looks like a very strong hint” that the companies should consider doing just that.
“He wants the parties to think about an alternate order that would not require a full block of the deal. He’s saying, ‘We should find a way to settle this,’ and he’s saying that publicly,” Mr. Osborne said.
Although the bureau has publicly taken a strong stand against the merger, legal documents released by the tribunal in May show that in February, the bureau sent a letter to the companies outlining a remedy that it was prepared to accept. The four-page letter was entirely redacted, so the remedies outlined at that time are not known.
Chief Justice Crampton’s letter says that if the companies share the information suggested, they can “streamline the upcoming trial” by reducing the amount of information that the companies plan to present regarding efficiencies. If the tribunal finds that the merger would constitute a substantial lessening of competition, Rogers and Shaw will be required to present evidence that the efficiencies gained by merging would outweigh the harms done to the economy. In law, this is called the “efficiencies defence.”
Chief Justice Crampton has asked the companies to meet on Tuesday to discuss the letter.