Rogers and Shaw are set to appear before the federal tribunal this fall in an attempt to overturn the Commissioner of Competition’s opposition to their $26-billion merger.Sean Kilpatrick/The Canadian Press
Canada’s Competition Tribunal expanded the scope of its hearings into Rogers Communications Inc.’s RCI-B-T planned takeover of Shaw Communications Inc. SJR-B-T on Monday by including the Rogers outage that shut down services countrywide in July.
Rogers and Shaw are scheduled to appear before the federal tribunal this fall in an attempt to overturn the Commissioner of Competition’s opposition to their $26-billion merger. In recent filings with the tribunal, Rogers and the Commissioner took opposing views on whether the outage on July 8 was relevant.
In a news release on Monday, Competition Tribunal Justice Paul Crampton said: “Questions related to network outages are relevant pursuant to the pleadings in this proceeding.”
The outage affected millions of Canadians, interrupting cellphone and internet services and shutting down systems such as Interac. Rogers has since announced plans to spend $10-billion over three years on network upgrades, and the Toronto-based company is offering $150-million worth of customer credits.
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Rogers and Commissioner of Competition Matthew Boswell were at loggerheads over the relevance of the outage, with the competition watchdog attempting to make it part of the debate on the merits of the Shaw takeover. Rogers has said it is taking steps to ensure an outage will not take down its entire system.
In July, Rogers said the outage occurred because of a coding error as part of a maintenance update to its core network, which caused some of its routers to overload and the core gateway to shut down. In response, federal regulators asked detailed questions about why the network went down, which Rogers answered.
Mr. Boswell is attempting to block the takeover, which would combine Canada’s two largest cable networks, arguing it would lead to higher prices and poorer service, particularly for cellphone customers. Rogers has attempted to address those concerns by agreeing to sell Shaw’s Freedom Mobile to Quebecor Inc. for $2.85-billion.
In a second news release on Monday, the Competition Tribunal said it would accept updated filings from Rogers, Shaw and Quebecor that detail the consumer benefits the telecom companies say will come with the proposed sale of Freedom Mobile. The three companies reached the final terms of the deal earlier this month.
Separately, analysts say Rogers will receive approval later this week for a proposed extension on approximately $12-billion in debt financing for the Shaw takeover.
Rogers borrowed the money through a special bond issue earlier this year, then was forced to ask the bondholders this month to extend the mandatory buyback deadline by one year in case it is not able to complete the Shaw acquisition.
In light of recent increases in interest rates, Rogers proposed paying up to $780-million in additional fees if all lenders agree to the extension. A group of the new Rogers bondholders attempted to hold up the refinancing to get better terms but, according to a report from Reuters on Monday, failed to garner the required support before a vote on Wednesday by all of the lenders.
Rogers bid for Shaw in March, 2021, and the companies had expected the friendly takeover to close earlier this year. The opposition from the federal competition watchdog has delayed the deal. Federal Minister of Innovation, Science and Industry François-Philippe Champagne must also approve the transaction.
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