Skip to main content
opinion

The Competition Bureau is doing its damnedest to position Quebecor Inc. QBR-B-T as Freedom Mobile’s white knight.

Its court applications to block Rogers Communications Inc.’s proposed $26-billion takeover of Shaw Communications Inc. are the latest sign that Quebecor – which reiterated its interest in Freedom on Thursday – is Ottawa’s preferred buyer.

Freedom, of course, is a discount wireless carrier currently owned by Shaw, with roughly two million customers in Ontario, Alberta and British Columbia. It’s apparent that Rogers, which is Canada’s largest wireless carrier, must divest Freedom in order to seal its deal with Shaw.

After all, the Trudeau government’s competition policy for the wireless market hinges on Freedom’s survival as Canada’s fourth-largest carrier. As far as the Liberals are concerned, Freedom is betrothed to Quebecor’s Videotron Ltd. Paving the way for Videotron’s expansion in other parts of Canada is a political slam dunk for the party’s future electoral prospects in Quebec.

Now the Competition Bureau is providing Industry Minister François-Philippe Champagne with an assist. The federal antitrust watchdog appears to be using its court applications to gain leverage to compel Rogers to sell Freedom to Quebecor, which is waiting in the wings to make such a deal.

What’s more, the bureau’s bluster is giving Rogers 26 billion big reasons to provide Quebecor with key concessions.

For starters, the Competition Bureau has determined that wireless competition between Rogers and Shaw has, as a result of the pending takeover, already declined. This provides a rationale for Freedom to be sold at a discounted price.

Obviously, Quebecor wants to acquire Freedom for as little money as possible. Now the Competition Bureau is working to ensure that outcome by highlighting Shaw’s reduced investment in Freedom’s wireless network and the company’s decreased marketing and promotional activity while it waits to unload the business.

If Freedom has stopped competing effectively as a result of those decisions, as the Competition Bureau suggests, then Quebecor will most certainly argue the asset is now worth a lot less.

Recent commentary from Mirko Bibic, chief executive officer of BCE Inc., seems to back up the Competition Bureau’s claim about reduced competition.

Last week, Mr. Bibic told investors that “competitive intensity between two potential merging parties isn’t quite there as it used to be, and that’s probably benefiting the entire industry,” according to a transcript obtained from the financial-intelligence platform Sentieo.

Of course, the Shaw family, which controls the Western Canadian cable company, only has its own parsimony to blame if Quebecor succeeds in buying Freedom on the cheap.

But a discounted sale price is likely just the beginning. The Competition Bureau also seems to be setting the stage for Rogers to make other trade-offs to ensure Freedom’s viability.

Of chief interest is the regulator’s assertion that separating Freedom from Shaw’s network infrastructure would reduce the carrier’s ability to offer bundled services. That’s a signal the bureau is putting pressure on Rogers to provide Freedom’s buyer with a wireless-network-sharing deal and resale agreements that would cover a variety of telecom services.

If Freedom’s new buyer – and let’s get real, we all know it will be Quebecor – was able to sell wireless, high-speed internet, television and home phone services in multi-product bundles in Ontario, Alberta and British Columbia, it would be a viable competitor. Consumers are addicted to the discounts they receive when buying multiple services.

Rogers is no doubt loath to make such allowances to help Quebecor or any other competitor. Will the Competition Bureau force its hand?

As satisfying as it might be to see the Competition Bureau and Mr. Champagne stick it to Rogers, the regulators also have an obligation to keep Quebecor in check.

Sure, Quebecor shelled out almost $830-million on 294 wireless licences across the country in last year’s 3500 MHz spectrum auction, and suggested it has serious national wireless ambitions. But this isn’t the first time the company has purchased spectrum outside of its home market in Quebec. In the past, it has resold wireless licences for profit.

In 2008, for instance, Videotron purchased a block of advanced wireless services spectrum in Toronto for $96.4-million. It later sold those fallow airwaves to Rogers in 2017 for $184.2-million, earning a profit of $87.8-million.

In 2017, Videotron made a $243.1-million profit after selling seven 700 MHz and 2500 MHz licences it had previously acquired in Southern Ontario, Alberta and British Columbia to Shaw.

When Quebecor president and CEO Pierre Karl Péladeau visited The Globe and Mail’s editorial board in November, I asked him what was preventing history from repeating itself.

“Nothing, as a fact,” Mr. Péladeau said at the time. “But certainly, you know, what we can say is that the conditions today ... are now giving the opportunity for us to establish our position in the marketplace.”

Ottawa can’t just take him at his word, especially if Quebecor buys Freedom.

Mr. Champagne, who signs off on spectrum transfers, must establish a time restriction to prevent Quebecor from reselling Freedom’s spectrum over the coming years. He should also impose additional deployment requirements on Freedom’s spectrum as a condition of sale to Quebecor.

The Competition Bureau, meanwhile, should impose its own provisions on Quebecor.

It’s obvious the antitrust watchdog and Mr. Champagne are arranging the marriage of Quebecor and Freedom. But matchmaking isn’t enough. Ottawa must ensure the marriage will last.

Your time is valuable. Have the Top Business Headlines newsletter conveniently delivered to your inbox in the morning or evening. Sign up today.

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 21/11/24 4:00pm EST.

SymbolName% changeLast
RCI-B-T
Rogers Communications Inc Cl B NV
-0.28%49.19
QBR-B-T
Quebecor Inc Cl B Sv
+1.46%31.89

Follow related authors and topics

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

Interact with The Globe