Rogers and Shaw have agreed to extend the deadline for Rogers' acquisition of Shaw to Feb. 17.DADO RUVIC/Reuters
Peter Nowak is the vice-president of insight and engagement at TekSavvy Solutions Inc.
Last year Rogers RCI-B-T darkly warned the Competition Tribunal that there was a “very, very, very grave” risk its deal with Shaw SJR-B-T would fall apart if its Jan. 31 deadline was not met. It was a drum the two companies had repeatedly beat. This week, they agreed to extend that supposedly all-important deadline – to Feb. 17 – while pledging their commitment to the deal. And look, it didn’t collapse!
Of course, the new self-imposed “deadline” – like the one before it – serves to press federal regulators into rushing the approval of the largest telecommunications takeover in Canadian history, despite an open legal challenge and continuing committee study.
And if one were to take a cynical view, that date was chosen for a reason. The companies’ latest preferred “deadline” coincides with the actual deadline for the Emergencies Act inquiry’s findings to be tabled in Parliament – right before a long weekend.
If there is a day for Minister of Innovation, Science and Industry François-Philippe Champagne to approve a hot-button takeover and draw the least amount of attention for doing so, it would be Feb. 17.
But Mr. Champagne must not give in to the same tactics that seem to have worked on the courts. The Competition Tribunal fast-tracked hearings last year and took just 15 days to reject the Competition Bureau’s case against the takeover, an astonishingly fast result. The Federal Court of Appeal then rushed its hearings by granting Rogers’ request for an accelerated court date before issuing a lightning-quick same-day decision, all to meet the Jan. 31 “deadline.”
For his part, Mr. Champagne said in December that he would not make his decision until there was legal clarity on the matter. Last week, he made it clear that he would not be rushed, saying, “As the regulator, I am not bound by any deadline.”
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The minister must hold true to his word. There is still a great deal of legal uncertainty arising from an application filed by TekSavvy with the CRTC. In it, we argue that the takeover hinges on an illegal side deal between Rogers and Videotron that will kill smaller internet service providers.
As part of the proposed $20-billion deal, Rogers plans to divest Shaw’s Freedom Mobile wireless business to Quebec-based Videotron. Rogers will then grant Videotron preferential wholesale access to its wireless and broadband networks across Canada so that Videotron can offer bundled mobile and internet services outside Quebec, where it does not own facilities.
However, it emerged at the Competition Tribunal’s hearing in December that Rogers will charge Videotron wholesale access rates below those set by the CRTC, which is what TekSavvy and other smaller ISPs pay.
The tribunal found that this special deal alleviated concerns raised in witness testimony that Videotron could not economically compete outside Quebec if it had to do so on regulated wholesale rates.
TekSavvy’s CRTC application argues that this deal violates the Telecommunications Act – specifically Section 27(2), which prohibits “undue preference,” in which companies grant special conditions to some carriers but not others. Given that Videotron would not be getting this special treatment if Rogers wasn’t desperately trying to get its takeover approved, it’s as clear a case of undue preference as can be.
Just last year, three of Canada’s largest independent ISPs – VMedia, Distributel and Ebox – were acquired by Videotron and Bell because of unviable regulated wholesale rates. The Rogers-Videotron arrangement, if allowed, will thus drive remaining competitors out of the market.
To prevent this, TekSavvy is asking the CRTC to investigate the wholesale deal and either annul it, apply it to all ISPs or, better yet, apply the lower regulated rates it calculated in 2019, before they were lobbied back up by Bell, Rogers and the other big providers.
How will the takeover look if the CRTC finds this side deal to be illegal? Would the tribunal still find that the deal won’t decrease competition if Videotron can’t offer service bundles outside Quebec at competitive rates? What happens if the CRTC pulls the linchpin out of the whole affair?
Parties have until Feb. 21 to comment on TekSavvy’s application. There will be no clarity to the Rogers-Shaw takeover – legal or otherwise – until the CRTC considers the record of that proceeding and issues its ruling.
Last week, after a grilling of the chief executives of Rogers, Shaw and Videotron parent Quebecor Inc. QBR-A-T, members of the industry committee rightfully urged Mr. Champagne to wait until these important questions have been answered.
Mr. Champagne must indeed not rush to judgment because, as is obvious by now, Feb. 17 is just another arbitrary date pulled out of thin air to serve Rogers’ interests. Canadians need him to stand firm.