Rogers President and Chief Executive Officer Tony Staffieri appears before the Standing Committee on Industry and Technology on Parliament Hill in Ottawa on Jan. 25.Dave Chan/The Globe and Mail
Members of Parliament pressed top executives at Rogers Communications Inc. RCI-B-T and Shaw Communications Inc. SJR-B-T on Wednesday for answers to lingering questions about how the proposed $20-billion takeover of Shaw by Rogers would impact jobs, competition and affordability in Canada’s telecommunications sector.
Several MPs expressed concerns about the takeover during the hearing in Ottawa, which was hastily convened by the House of Commons industry and technology committee on the eve of deal’s Jan. 31 deadline.
Conservative MP Rick Perkins said he had heard from company insiders that the takeover could result in 4,000 to 5,000 job losses. The telecoms also faced questions about the deal’s potential impact on cellphone bills, and about whether Videotron Ltd., a Quebecor Inc. QBR-B-T subsidiary that is set to acquire Shaw’s Freedom Mobile for $2.85-billion as part of the transaction, is the right buyer for Canada’s fourth-largest wireless carrier.
Despite its many criticisms and questions, the committee has no authority over the outcome of the deal. Last month, the Competition Tribunal ruled that the takeover could proceed, and that ruling was upheld on Tuesday by the Federal Court of Appeal. The deal’s approval now rests in the hands of federal Industry Minister François-Philippe Champagne.
A wide variety of witnesses appeared before the committee, including executives from Rogers, Shaw and Videotron, legal experts, academics and the chairman of Globalive Inc., the firm that originally founded Freedom and made an unsuccessful $3.75-billion offer to buy it back.
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Representatives of Rogers and Shaw touted the deal’s competitive benefits, arguing that combining their cable networks will create a stronger competitor for Telus Corp. T-T in Western Canada while enabling Videotron to compete vigorously and expand beyond Quebec, its home market.
In comments to the committee, Rogers chief executive Tony Staffieri did not specify the number of job cuts likely to result from the takeover, saying only that while some overlapping positions will be eliminated, the company “will look to deploy resources in areas that are growing.”
“There will be a net investment in more jobs,” Mr. Staffieri said.
Representatives of Rogers, Shaw and Quebecor argued that fierce opposition to the takeover from rivals Telus and BCE Inc. BCE-T is evidence that the deal would be good for competition. Quebecor president and CEO Pierre Karl Péladeau pointed to Project Fox – Telus’s name for its campaign to “kill, slow and shape” the merger – as an example of the Vancouver-based telecom’s “toxic and Machiavellian tactics.”
Shaw president Paul McAleese said Telus “conspired” to replace Videotron with Globalive as the purchaser of Freedom.
“What we learned is that Globalive is a clear surrogate for Telus,” Mr. McAleese said, calling Globalive chairman Anthony Lacavera a “Pinocchio” to Telus CEO Darren Entwistle’s “Geppetto.” Mr. McAleese said Mr. Lacavera has a “dubious record” as a wireless executive.
Mr. Lacavera, meanwhile, highlighted his independence from Telus. He described Globalive’s relationship with the company as a mutually beneficial network and spectrum-sharing deal, and touted his success, during the period when Globalive owned Freedom, at growing the wireless company from nothing into a carrier with roughly a million subscribers. Mr. Lacavera said he personally opposed selling Freedom – which was called Wind Mobile at the time – to Shaw in 2016. But he said the sale went through because of the company’s governance structure.
Mr. Champagne, the Industry Minister, said Wednesday that he is working to understand the reasoning behind the Federal Court of Appeal’s decision on Tuesday to uphold the Competition Tribunal’s ruling in favour of the takeover. The Competition Bureau had petitioned the court to overturn the ruling.
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In order to approve the takeover, Mr. Champagne has to allow the transfer of Shaw’s wireless licences to Videotron. The Minister has previously said that, if he were to approve the transfer, Videotron would be expected to hold on to the licences for at least a decade and commit to bringing down cellphone bills outside of Quebec.
“That’s what I’m going to be reflecting on – what are the expectations that I can demand that would ensure competition, that would ensure ... affordability,” Mr. Champagne told reporters Wednesday. “But like I said, I’m very much in the mind of looking at the decision and rendering a decision in due course, making sure that we have that competition and affordability that Canadians want.”
During the committee hearing, Liberal MP Nathaniel Erskine-Smith questioned the enforceability of Mr. Champagne’s conditions and grilled Mr. Staffieri on why Rogers should be able to choose its own wireless competitor by picking Freedom’s buyer. Mr. Staffieri responded that Rogers went through an iterative process with the federal government to select the most credible buyer that met the criteria set by Mr. Champagne.
Wednesday’s hearing was the second time Rogers and Shaw executives have defended their proposed deal in front of the House of Commons committee, which includes Liberal, Conservative, New Democratic and Bloc Québécois MPs. The committee recommended against the takeover early last year.
The first committee hearing happened before Rogers and Shaw had proposed divesting Freedom – a move intended to address regulators’ concerns that the takeover would reduce competition in the wireless market. The committee decided to re-examine the issue in light of the proposed divestiture. The Bloc opposed Wednesday’s hearing, suggesting that the committee was being influenced by Telus.
A Telus spokesperson said in a statement that the company “will continue to compete fiercely” regardless of the outcome of the proposed takeover.
“Our opposition is no secret, nor should it be a distraction from the fact that this merger is clearly against the interests of Canadians, particularly those residing in rural areas or in Indigenous communities. We encourage the government to listen to the wide range of independent voices that have publicly voiced concerns, and stop the merger,” Richard Gilhooley said.
Prime Minister Justin Trudeau also spoke about the deal between Rogers and Shaw on Wednesday, saying that the government’s top priority is trying to “keep prices down and keep quality high” for consumers of telecom services.
“That’s why we expressed concerns from the outset around the original proposal for Rogers-Shaw, and why we’ve been working very hard to see if there are ways to ensure continued competition in the industry while creating opportunities for better services for Canadians,” Mr. Trudeau told reporters.
With files from Marieke Walsh and Bill Curry