Rogers-Shaw Merger Must Exclude Freedom Mobile or Be Denied: Federal Committee

According to The Globe and Mail, a House of Commons committee advising Ottawa on Rogers Communications Inc. (RCI)’s proposed $16 billion CAD acquisition of Shaw Communications will recommend the government block the deal, unless the company agrees to sell off Shaw’s wireless business, which includes Freedom Mobile.

The House of Commons’ industry and technology committee is set to table a report on Monday advising Industry Minister François-Philippe Champagne to reject the Rogers-Shaw merger if RCI refuses to divest Shaw’s wireless business, three anonymous sources familiar with the report’s findings told The Globe and Mail.

In April of last year, telecom experts came to the same conclusion — the Rogers-Shaw merger should, at the very least, not include Freedom Mobile to minimize the risk it poses to competition in Canada’s already oligopolistic telecom sector.

Mr. Champagne is not obligated to follow the committee’s recommendations, which are non-binding. However, The Globe and Mail‘s sources said the report’s findings carry the potential to influence his decision. The committee comprises members of Parliament from the Liberal, Conservative and New Democratic parties and the Bloc Québécois.

Laurie Bouchard, a spokesperson for Mr. Champagne, said in an email to the publication that it would be “inappropriate” for the minister to comment given that he is one of the regulators reviewing the proposed merger.

“We look forward to reviewing the work of the independent committee and will carefully consider its final analyses, recommendations, and findings,” said Bouchard.

If approved, the merger would see Freedom Mobile absorbed by RCI, reducing the number of wireless players from four to three in Ontario, Alberta, and British Columbia, and leading to higher wireless prices for consumers.

Rogers has argued before MPs that acquiring Shaw and Freedom Mobile would allow the company to better compete against its rivals, Bell and Telus, across Canada. However, there has been pushback from the Canadian public in the form of petitions, as well as MPs, over how the merger could possibly be good for consumers and competition.

Montreal-based Quebecor Media Inc. has not only expressed interest in buying Freedom Mobile but has also demonstrated that it can afford the acquisition. Even Freedom Mobile’s original founder is willing to buy the telco back.

The Rogers-Shaw merger is pending approval from three regulators: the Competition Bureau, the Canadian Radio-television and Telecommunications Commission (CRTC), and Innovation, Science and Economic Development (ISED) Canada.

The CRTC is focused on evaluating the broadcasting side of the Rogers-Shaw merger, the Competition Bureau is looking at its possible impact on competition across relevant industries, and Innovation, Science and Economic Development Canada is responsible for reviewing the transfer of Shaw’s spectrum licences to Rogers.

Rogers has said it expects the deal to close sometime during the second quarter of this year.