Court rejects Competition Bureau’s appeal to block Rogers’ takeover of Shaw

January 24, 2023 Canuck News/Business

Canada’s Federal Court of Appeal has rejected the Competition Bureau’s request to block the takeover of Shaw by Rogers, a decision that removes one of the final hurdles standing in the way of the $20-billion merger from going ahead.

The merger, first proposed in 2021, would see Toronto-based Rogers Communications Inc. take over Calgary-based rival Shaw Communications Inc. in a move that would further consolidate Canada’s top-heavy telecommunications sector.

The deal has faced numerous regulatory hurdles since being proposed, but in a lengthy review process the companies have secured most of the approvals they require to consummate the deal. As part of that process, Rogers has agreed to sell Shaw’s wireless business, Freedom Mobile, to Quebec-based Videotron.

The Competition Bureau was a major sticking point and sought to block the merger on the grounds that it would be bad for consumers, but a tribunal rejected that argument last month.

The bureau appealed to a higher court to reconsider, and Tuesday’s hearing brought an end to that dispute, in the companies’ favour.

“According to the tribunal, this was not a particularly close case,” the judge said. “It found, I would say, on the evidence rather decisively that there was no substantial lessening of competition.”

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Now that the Competition Bureau has been unsuccessful, the final hurdle standing in the way of the deal being consummated is the approval of federal Innovation Minister François-Philippe Champagne.

Champagne has previously said he would not allow the deal to go through as originally structured, and even with the divestment of Freedom Mobile, he has laid out a checklist of what would be needed to get his approval.

The minister has said he would rule on the merger only once there is “clarity on the ongoing legal process.”

In a tweet on Tuesday, Champagne said he “will be reviewing” the court’s ruling “closely” and added that he will “render a decision in due course.”

Rogers, Shaw and Videotron have a self-imposed deadline of Jan. 31 to finalize the deal, but many such deadlines have come and gone in this lengthy process.

Officials from Rogers, Shaw and other stakeholders will be in Ottawa on Wednesday to testify in front of the House of Commons standing committee on industry and technology. While the hearing is likely to result in probing and intense questioning, the committee itself lacks the power to actually block the deal.

Consumer watchdog group the Public Interest Advocacy Centre says the court made a huge mistake in rejecting the Competition Bureau’s arguments.

“The public can only be suspicious that the powers that be want this deal to close — even if it means a decade of high wireless and internet prices for Canadians,” executive director and general counsel John Lawford said after the verdict.

“The court’s ruling means the Canadian Competition Act is utterly broken and needs to be radically rewritten to actually provide tools to block anti-competitive mergers.”

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