Quebecor CEO Pierre Karl Péladeau on Monday testified before the Competition Tribunal that his company’s acquisition of Shaw-owned Freedom Mobile would help lower wireless and internet prices across Canada (via Financial Post).
The three-member Tribunal is reviewing Rogers’s proposed $26 billion acquisition of Shaw Communications. It is being opposed by the Competition Bureau, which believes the deal will lead to higher prices and lower competition in the market.
Earlier in the year, Rogers and Shaw agreed to sell Freedom Mobile to Vidéotron as a potential remedy to antitrust concerns regarding their merger. The Commissioner of Competition isn’t convinced so far, though, with the Bureau kicking off Tribunal hearings earlier this month by reiterating that the proposed Freedom sale isn’t enough to win its approval.
Péladeau said during Monday’s hearing that his company “saw a business opportunity” in the Freedom sale that could supercharge its longstanding plans to expand nationwide.
Quebecor’s Vidéotron has been able to carve up a good chunk of the Quebec market and give national incumbents a run for their money by offering lower prices in the province. “Vidéotron needs to grow outside of Quebec if it wants to continue offering lower prices,” Péladeau told the Tribunal.
Meanwhile, experts last week testified before the Tribunal that the union of Rogers and Shaw would raise prices for low-income Canadians and eliminate Canada’s fourth wireless competitor.
“One of the thrusts of the Commissioner (of Competition)’s case over the last two weeks is that Vidéotron can not likely succeed notwithstanding its best intentions,” said John Rook, a lawyer for Vidéotron.
However, Péladeau told the Tribunal that Vidéotron would be able to offer lower prices if it expanded outside of Quebec. “We’ve always wanted to grow in the rest of Canada,” he said.
Péladeau added that there is no other way the operator could buy the 1.7 million customers in Alberta, British Columbia, and Ontario that the Freedom purchase will bring.
If the Vidéotron-Freedom deal closes, Péladeau hopes to replicate his company’s success in Quebec in other provinces. The Tribunal was also shown an October statement from Péladeau where he said his company will work “to end the reign of the ‘Big 3′” — referring to Rogers, Bell Canada, and Telus — by encouraging competition and offering better prices outside Quebec.
Vidéotron’s senior VP and chief technology officer, Mohamed Drif, also appeared before the Competition Tribunal on Monday. The company’s VP of finances, Jean-François Lescadres, took the stand last week on Friday.
Tribunal hearings are expected to last four weeks, with oral arguments scheduled for mid-December. A decision on the fate of the Rogers-Shaw deal will likely be reached by January, if not sooner.
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I don’t think that the costs for lower income Canadians would go up, nor do I think Videotron would displace the “big 3”. But I do think that Videotron could do an “as good or better” job of presenting a lower cost option in exchange for tiered access to primary and secondary areas, like Freedom does. So I don’t see what the big deal is.
It’s ironic because I think most people see it as a Freedom acquisition… while the competition bureau seem to be focussing on Shaw/Shaw Mobile and the bundling price point that they offer.
I think it sucks because Shaw has effectively been sandbagging their cellular network for over a year now and ANY alternative would be more competitive than what they are now.
I do worry about there being a high price floor to what Vidéotron offers if they rely too much on reselling Rogers’ cell network (and the backhaul for the existing freedom network).
Videotron bought VMedia too to help with their offering, but then again will be dependant on Rogers to actually deliver their product.