After the Competition Bureau informed Rogers and Shaw it plans to oppose the merger of both companies, the federal government organization announced on Monday it plans a full-scale block of the merger.
The Competition Bureau says it wants to block the Rogers plan to acquire Shaw for $26 billion, “in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.”
On Monday, the Bureau says it requested an order from the Competition Tribunal to stop the Rogers-Shaw merger from proceeding. It will also request an injunction to stop both Rogers and Shaw from closing the deal, until the Bureau’s application can be heard by the Competition Tribunal.
Removing Shaw will decrease competition in the wireless market, where the ‘Big 3’ players Rogers, Telus and Bell control roughly 87% of Canadian subscribers, said the Bureau.
The Bureau’s investigation concluded competition between Rogers and Shaw “has already declined” and if the companies do merge, consumers will be harmed as there will be a loss of “an effective, growing and disruptive regional competitor.”
If Rogers were to acquire Shaw, competition would be reduced by:
- eliminating an established, independent and low-priced competitor;
- preventing future competition for wireless services, including 5G, within and outside Shaw’s existing service area; and
- preventing competition in wireless services for business customers in Ontario, Alberta and British Columbia.
Shaw’s 2 million wireless customers in B.C., Alberta and Ontario has “consistently challenged” the ‘Big 3’, through its improving network and aggressive pricing on plans with larger data buckets and other service innovations. Shaw has helped lower wireless prices and make wireless data more accessible to Canadian consumers, which pay some of the highest prices in the world, explains the Bureau.
“The Competition Bureau conducted a rigorous investigation of the proposed Rogers-Shaw merger and concluded that it would substantially prevent or lessen competition in wireless services. Eliminating Shaw would remove a strong, independent competitor in Canada’s wireless market – one that has driven down prices, made data more accessible, and offered innovative services to its customers,” said Matthew Boswell, Commissioner of Competition in a statement.
“We are taking action to block this merger to preserve competition and choice for an essential service that Canadians expect to be affordable and high quality,” added Boswell.
The Bureau says that since Rogers planned to acquire Shaw, the latter has reduced its plans to enter new wireless markets, debut a 5G network, expand wireless services to businesses and also limited its network expansion. Shaw has also lowered its marketing and promotional activity, which has “resulted in an overall loss of competition in the market.”
…developing, more to follow