Jim Shaw, president and CEO of Shaw, and Ted Rogers, CEO of Rogers, announce alliances at a news conference on March 23, 2000.PETER TYM
David Moscrop is a writer and political commentator. He is the author of Too Dumb for Democracy and a new Substack newsletter.
Canada is a poster child for an old critique of the free market: Capitalism tends toward monopoly. Those who subscribe to that thinking see the drive toward concentrated market share as not just bad news for consumers and the economy, but also overwhelming and unstoppable.
Now, we all do.
There are two ways to read Tuesday’s announcement by Industry Minister François-Philippe Champagne, which sets stricter conditions for a proposed merger between Rogers Communications Inc. and Shaw Communications Inc.
One is that the newly pugnacious Competition Bureau under head Matthew Boswell has scored a victory in exacting greater consumer protection.
The other view is that the last-minute announcement by Mr. Champagne, just as the parties are due to head into mediation this week, signals that the deal will go ahead – that Mr. Boswell, who has long opposed the deal outright, had blinked and was prepared to accept a paltry consolation prize.
But the truth is that while the result of the merger attempt matters, there’s a greater issue at play. Whatever the outcome, by picking such a high-profile fight, Mr. Boswell has shown the country that its system for protecting consumers and markets is broken. And the first step to fixing any problem is knowing that it exists.
This past summer, a national service outage brought large parts of the country to a standstill. The Rogers system failure of cellular and broadband services affected day-to-day users, banks, businesses and even some 911 services. At the time, observers noted that the shutdown could affect the pending Rogers-Shaw merger – a move that would further consolidate the Canadian telecom sector, which is not exactly known for being competitive.
On Tuesday, Mr. Champagne blocked the $26-billion proposed Rogers-Shaw deal while setting conditions for a renewed attempt. He said he was looking out for consumers, noting, “my only concern is better prices to Canadians.” With that goal in mind, Mr. Champagne stipulated conditions for a deal the federal government could accept. A new arrangement would need to include lower rates for customers in Ontario, Alberta and British Columbia, comparable with those offered in Quebec. It would also require Quebecor’s Videotron to hold the wireless licence for Freedom Mobile for a decade, which it must also acquire from Rogers by way of Shaw for the deal to go forward.
As The Globe and Mail reported, Mr. Champagne’s announcement comes on the heels of a Rogers proposal in response to the Competition Bureau’s opposition to the deal. This came ahead of mediation talks scheduled for Thursday, which could avoid sending the matter to tribunal. For now, at least.
The Competition Bureau has a lousy history. Its job is to help ensure competition in the Canadian marketplace, a goal it has spectacularly failed to meet time and time again. Canada is a handful of telecom companies in a trench coat and has been for decades. Or mining companies, if you prefer. Or energy companies. Or grocery store chains. The list goes on. We are a country of monopolies and oligopolies. The bureau has a stunning track record of defeat when it comes to stopping mergers, one of its core missions. It’s a bit like a basketball hoop without a backboard.
Mr. Boswell is trying to fix that. Last week he advocated changes to competition regulations to prevent sector consolidation. In a speech to the Canadian Bar Association conference on competition law, he said, “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.”
That has been his message for some time: The country’s competition laws and regulations are weak and insufficient. They must change. He’s correct.
Mr. Boswell and the Competition Bureau now find themselves in a sort of perverse win-win scenario – with an asterisk. If the Rogers-Shaw merger goes through, even with the new stipulations from Mr. Champagne, the case will vindicate him and prove his point – the country has a hard time stopping harmful mergers. Look at what it took to sort out this mess. It was a close call and could have gone otherwise, especially under a different government. If the deal fails, well, then the bureau will have done its job for a change by stopping the merger. Or at least by having helped stop it. It’s a sad win-win and an indictment of the state of the Canadian marketplace.
The Rogers-Shaw merger is a big deal with big implications for millions of Canadian consumers who already pay some of the highest prices in the world for telecom services. But the potential arrangement has implications beyond the sector. This is a test of the bureau’s new direction and efforts to fulfill its mandate. It’s also a check-in on whether the Trudeau government truly cares about protecting consumers, a promise it has made many times and has yet to deliver on. Whichever way things go, it will continue to be the case that Canada’s competition law and regulations must change to protect consumers – for real this time – but the fact the state is putting up a fight suggests something, however small, may be shifting in the establishment psyche.
We ought to hope it is. Warnings of a looming recession are now daily events. Economic downturns slaughter firms that can’t keep up. Those firms are left to the depredations of larger firms. That means further consolidation – more monopolies, or oligopolies, to be fair. It is important to secure statutory and regulatory changes to forestall any further mergers that may squeeze Canadians ever tighter. And there’s not a moment to lose. Folks can’t take any more squeezing.