Rogers Selling Freedom Mobile Not Good Enough, Says Competition Bureau Filing

Selling Freedom Mobile may not be the complete answer to Rogers and Shaw’s regulatory woes for their proposed $26 billion CAD merger, according to a filing from the Competition Bureau that was made public (with redactions) on Tuesday — reports the Financial Post.

After notifying both telcos of its plans to block their deal over the inclusion of Shaw-owned Freedom Mobile, Canada’s fourth-largest wireless provider, last week, the Competition Bureau on Monday petitioned the Competition Tribunal for a “full block” of the merger “in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.”

Last week, Rogers publicly vowed to sell off Shaw’s entire wireless operation and assets to earn approval for its acquisition of Shaw. That may not be enough, though, the Competition Bureau said in its Monday filing with the Competition Tribunal.

“Rogers and Shaw have (redacted) with parties interested in acquiring Shaw’s Freedom Mobile wireless business and have claimed that such divestiture would eliminate any substantial lessening or prevention of competition resulting from the proposed transaction,” the filing reads.

“However, the divestiture proposed is not an effective remedy for the competitive harm the Proposed Transaction has caused and will likely continue to cause.”

If Rogers cannot alleviate all of the Bureau’s concerns outside of court, the two parties will have to argue their cases before the tribunal in proceedings that could take months.

Rogers has been trying to sell Freedom for quite some time now, with the two frontrunners in the sale process being rural internet service provider Xplornet Communications Inc., backed by U.S.-based investment firm Stonepeak Partners LP, and the Aquilini family, which owns the NHL’s Vancouver Canucks.

None of the options so far have managed to appease the Bureau or the Ministry of Innovation, Science and Economic Development (ISED) Canada, which has the same Freedom Mobile-shaped bone to pick with the merger hopefuls. requirements so far.

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 that would reduce the number of wireless players in Alberta, B.C., and Ontario, where Freedom Mobile has about two million customers, from four to three and likely lead to higher phone bills.

Rogers-Shaw even turned to Québecor Media Inc. for a potential deal last week. Freedom Mobile’s original founder, Anthony Lacavera, told rogers on Tuesday that his $3.75 billion offer for Shaw’s wireless business still stands after the Competition Bureau brought down the hammer on the two telcos.

The competition watchdog stressed Freedom’s history of introducing price competition to markets dominated by Canada’s Big 3 telcos. “Removing Shaw as a competitor threatens to undo the significant progress it has made introducing more competition into an already concentrated wireless services market,” the Bureau said in its Monday filing.

“The Competition Bureau has stated that there must be a continuation of a vibrant and competitive wireless market. We agree, and to that end, we are engaged in a process to divest Shaw’s Freedom Wireless business in its entirety,” Rogers said in a statement on Monday evening.

Rogers wants to close the deal post-haste and therefore would prefer to avoid a protracted legal battle. The telecom giant is currently prioritizing the sale of Freedom Mobile in hopes of compelling regulatory approval from the Competition Bureau and ISED Canada.

In the Bureau’s Monday filing, the Commissioner of Competition revealed that the remedy package originally proposed (in private) by Rogers would “exclude certain assets and interests, including assets Shaw has used to provide Wireless Services and/or wireless subscribers.”

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