Rogers Communications Inc. and Shaw Communications Inc. don’t believe the bell has rung for their proposed $26 billion CAD merger after the Competition Bureau on Friday notified the pair of its plans to block it — reports The Globe and Mail.
Rogers and Shaw moved their deadline for the closing of their deal back from June 13 to July 31 in response, officially exceeding their previous predictions of getting the merger done in the first half of this year. Canada’s two largest cable operators continue to scramble for an acceptable suitor for Shaw’s wireless segment, Freedom Mobile.
The two companies said in a statement on Saturday morning that the deal is still in place and that they would push back against the application by Matthew Boswell, the Commissioner of Competition.
The Competition Bureau on Monday officially petitioned the Competition Tribunal to prevent the Rogers-Shaw merger “in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.”
The competition watchdog will also seek an injunction to stop Rogers and Shaw from rushing their deal until Boswell’s application is heard by the Competition Tribunal.
The Competition Bureau’s primary pain point with the Rogers-Shaw deal is Freedom Mobile, which the regulator wishes to ensure is sold to a new owner that will make a long-term commitment to ensuring competition in cellphone markets.
Freedom Mobile has about two million wireless customers in Alberta, British Columbia, and Ontario, making it the fourth-largest wireless operator in the country. There are concerns that Freedom Mobile will struggle to compete with Canada’s Big 3 — Bell, Telus, and Rogers, which will become even bigger if it acquires Shaw — if it is sold.
What’s more, Rogers’ sale process for Freedom Mobile has been called a “non-competitive sham” by Anthony Lacavera, the founder and former CEO of Freedom Mobile who now wants to buy it back.
Freedom Mobile is also the bone of contention between Rogers-Shaw and the Ministry of Innovation, Science and Economic Development (ISED) Canada, whose approval is also needed for the merger to go through.
The Competition Bureau is looking at the merger’s possible impact on competition across relevant industries, while ISED Canada is evaluating the transfer of Shaw’s spectrum licences to Rogers.
Innovation, Science, and Industry Minister François-Philippe Champagne said in March that Ottawa would not allow the “wholesale transfer” of Shaw’s wireless licences to Rogers, as doing so would reduce the number of wireless players in Alberta, B.C., and Ontario from four to three and likely lead to higher phone bills.
Sources familiar with the matter told The Globe and Mail that Rogers and Shaw aren’t keen on the idea of engaging in hearings that could last months, and are instead focused on finding a buyer for Freedom that satisfies both the Competition Bureau and ISED Canada.
Rogers has been in talks with several potential buyers — including rural internet service provider Xplornet Communications Inc., as well as the Aquilini family, which owns the NHL’s Vancouver Canucks. — over the past couple of months, but its efforts are yet to bear fruit. Last week, Rogers even invited Québecor Media Inc. to the table.
According to analysts at investment bank Cowen Inc., the likelihood of the Rogers-Shaw deal falling through is higher than ever right now. Cowen analysts also see two scenarios where Rogers successfully acquires Shaw.
“We see two paths to deal completion: (1) Rogers goes tail between its legs to Québecor and works out a divestiture of Freedom; (2) ISED approves the divestiture to Stonepeak and Rogers closes the Shaw transaction while fighting the Competition Bureau in front of the tribunal,” the analysts said.
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I hope it’s blocked for the sake of every Canadian.
If it’s just the cable, landline business, it shouldn’t negatively impact Canadians directly. In that line of business, there is zero market overlap between Rogers and shaw. They’ll likely raise rates, but that won’t be driven by any reduction in competition. Rogers will raise rates to force customers to pay for their adventures but they’ll likely do that either way.
It could be advantageous.
Rogers has often included NHL Gamecenter into TV bundles since they own it in a way that Shaw was never able to do since they themselves would need to include it into the cost of their plans.
I think the point that you are making and that I hope you understand is that at the TV/Internet level, the competition of Telus vs Shaw simply becomes Telus vs Rogers in the areas Shaw currently does business.
It’s not a big change.
Correct. Since Rogers and Shaw do not compete today in any area for TV/Internet, this would have as much impact on competition for TV/internet as if Rogers was buying a cableCo in Texas.
Maybe they’d have more luck unloading Freedom if it was Shaw that was trying to sell a part of Shaw instead of Rogers trying to sell a part of something they don’t even own.
I wouldn’t be surprised if one of the Rogers executives does a retrospective interview in a couple of years expressing “surprise” at the sentiment of Canadians and the regulators related to the Rogers-Freedom Mobile situation.
It’s exactly the type of out of touch media I’m so used to seeing coming from them eh?
Can we stop talking about “Robbers selling Freedom”??? (OK, that sounded like what the libranos are doing… 🤣)
Can’t sell what you don’t own…yet.