Skip to main content
Open this photo in gallery:

Rogers and Shaw applications are pictured on a cellphone in Ottawa on May 9, 2022.Sean Kilpatrick/The Canadian Press

The Competition Bureau says it is appealing a Competition Tribunal decision permitting Rogers Communications Inc.’s RCI-B-T $20-billion takeover of Shaw Communications Inc. SJR-B-T to proceed because the tribunal made legal errors in its rush to issue a judgment before the year’s end.

Rogers and Shaw, meanwhile, expressed their dismay that Commissioner of Competition Matthew Boswell is appealing the decision and applying for an injunction that, if granted, would prevent the deal from closing until the case can be heard by the Federal Court. The companies said they remain committed to the “pro-competitive” deal, which is valued at $26-billion including debt and would also see Quebecor Inc.’s QBR-B-T Videotron Ltd. snap up Shaw’s Freedom Mobile wireless carrier for $2.85-billion.

“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,” the companies said in a joint statement Friday.

“We are deeply disappointed that the Commissioner continues to attempt to deny Canada and Canadians the advantages that will come from these proposed transactions.”

How the Rogers-Shaw merger ended up in front of the Competition Tribunal

Rogers-Shaw decision raises challenges for Competition Bureau

The Competition Bureau, meanwhile, said in its notice of appeal that the tribunal made “two fundamental errors of law” in its rush to make a decision quickly. Both of the alleged errors concern the fact that the three-member panel focused on the divestiture of Freedom to Videotron, which was only proposed after the bureau had filed an application to block the overall merger.

“The tribunal issued its decision regarding the largest and most complicated challenge of a merger in Canadian history in an unprecedented fifteen days,” the bureau wrote, noting that the case included testimony from more than 40 witnesses and almost 2,000 exhibits.

The tribunal normally takes months to mull decisions but told observers that it is sensitive to commercial deadlines and would strive to get a decision out quickly. The companies’ lawyers had cautioned that the deal could fall apart if it doesn’t close by Jan. 31 and that Rogers would have to pay roughly $260-million to its bondholders to extend the deadline past the end of 2022.

If the court grants an injunction, that could push the deal into mid-2023, RBC analyst Drew McReynolds predicted. Otherwise, the takeover could close as soon as it receives the final signoff from Industry Minister François-Philippe Champagne, whose department is reviewing the transfer of wireless licences from Shaw to Quebecor’s Videotron unit. That could be as early as January, Mr. McReynolds wrote in a research note.

Earlier Friday, Rogers and Shaw extended the deadline for their proposed merger to Jan. 31 as they wait to clear the final regulatory hurdles.

The telecoms saw their stock prices surge Friday on the news that the tribunal had dismissed the bureau’s application to block the merger, which has been in the works for almost two years. Rogers shares closed at $63.37 on the Toronto Stock Exchange, up almost 4 per cent, while Shaw shares rose 9 per cent to $39.01.

In reaching its decision, the tribunal rejected the bureau’s arguments that allowing Videotron to acquire Freedom Mobile would weaken Canada’s fourth-largest wireless carrier, resulting in higher cellphone bills and poorer service, particularly in Alberta and B.C.

The tribunal said in a summary of its decision, published online Thursday night, that the transaction is “not likely to result in materially higher prices” or other anti-competitive effects. It said it would publish a full decision within 48 hours.

Documents submitted to the tribunal this week indicate that Rogers, Shaw and Videotron have paid almost $20-million in legal fees and are asking to be reimbursed a quarter of that, plus disbursements, the expenses incurred by their lawyers.

In a joint statement issued early Friday, Rogers and Shaw thanked the three-member panel “for their work in rendering a swift decision” and said they would work to secure Mr. Champagne’s approval.

Mr. Champagne said in a statement on Twitter that he will review the tribunal’s decision in detail and will wait until there is “clarity on the ongoing legal process” before deciding whether to approve the transfer of wireless licenses.

Last fall, Mr. Champagne laid out the conditions under which his department would approve the transfer of Shaw’s wireless licences to Videotron. Videotron has already agreed to those conditions, which include holding onto the licences for at least a decade and offering wireless prices comparable with those in Quebec.

Critics said the outcome of the tribunal hearing points to a need to update the country’s competition laws.

“It is no surprise that the Competition Act that has failed to protect Canadians every single time from anti-competitive mergers like this one for the past 40 years has failed us yet again,” said Anthony Lacavera, who founded Freedom Mobile in 2008 and ran it for eight years before selling it to Shaw.

Mr. Lacavera, who made several unsolicited bids to buy back the carrier earlier this year, called on the federal government to “step in to stop this merger and then oversee a fair, open and transparent process for the Freedom Mobile wireless assets to ensure the best outcome for Canadians.”

The Public Interest Advocacy Centre, an Ottawa-based consumer advocacy group, denounced what it called an “unseemly rush to judgment” by the tribunal.

“Consumers now face a decade of competitive winter, with higher cellphone, home internet, cable, satellite and internet TV and home phone prices,” said John Lawford, PIAC’s executive director and general counsel, in a statement.

Speaking to reporters in Ottawa Friday, Conservative Leader Pierre Poilievre said he has “very serious concerns” about consolidation in the telecom sector.

“We don’t have enough competition. We saw that with the Rogers shutdown that occurred seven months ago now,” he said, referring to the widespread outage on July 8 that took down wireless, internet and home phone service for all Rogers customers.

“We’re going to be looking very carefully at the tribunal’s ruling before pronouncing our final position on this. But our purpose in all telecom policy is more competition and choice so that we can have lower prices and better service for our consumers,” he added.

With a report from Janice Dickson.

Report an editorial error

Report a technical issue

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 07/11/24 4:15pm EST.

SymbolName% changeLast
RCI-B-T
Rogers Communications Inc Cl B NV
-0.04%50.95

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe