Competition Bureau files lawsuit to block Rogers Shaw merger |  CBC News

Competition Bureau files lawsuit to block Rogers Shaw merger | CBC News

The Competition Bureau has filed an application to block Rogers Communications Inc. From the purchase of Shaw Communications Inc. Because it claims the deal will result in worse service and higher prices, although experts say the move isn’t necessarily the end of the road.

The federal regulator is asking the competition court to block the $26 billion deal from proceeding and is requesting an injunction to prevent the two companies from closing the deal until the Bureau’s request can be heard.

The bureau said the merger would lead to “higher prices, lower quality of service and fewer options,” particularly in the wireless sector, where Rogers, Bell and Telus currently serve about 87 percent of Canadian subscribers.

The Bureau’s investigation into the March 2021 deal determined that the proposed acquisition would eliminate a “well-established, independent, low-priced” competitor in Shaw-owned Freedom Mobile. It would also prevent current competition in wireless services in Ontario, Alberta and British Columbia and suppress more competition in areas such as 5G.

“The elimination of Shaw will remove a strong, independent competitor in the Canadian wireless market – a competitor that has lowered prices, made data more accessible, and provided innovative services to its customers,” Competition Commissioner Matthew Boswell said in a statement.

He and the bureau argue that Xu has “consistently challenged” the Big Three.

Watch | The Rogers-Shaw deal raises competition and pricing concerns:

Rogers plans to buy Shaw for $26 billion raises concerns about competition and pricing

Rogers Communications has signed a deal to buy Shaw Communications for $26 billion pending approval from the Canadian Competition Bureau, the CRTC and the Canadian government. The deal has raised concerns that reduced competition will lead to higher mobile phone bills for Canadians. 1:49

Shaw now provides wireless services to more than 2 million customers in Ontario, Alberta and British Columbia, and its wireless subscriber base has recently doubled and data rates are down, previously increasing year-over-year, the bureau said.

However, her opposition may not doom the deal.

Rogers and Shaw, who revealed the office’s intentions over the weekend, announced that they plan to go ahead with the deal and fight the commissioner’s efforts to block it.

Not the end of the road Rogers Shaw

Neither company immediately responded to a request for comment, but they sought to fend off some of the office’s criticism by trying to sell Freedom, which makes up the bulk of Shaw’s wireless services. It was reported that Xplornet Communications Inc. New Brunswick-based rural internet service provider and Quebecor Inc. In Montreal, they are interested in Freedom.

Innovation, Science and Economic Development Canada, which has not yet approved the deal, could block the deal from moving forward, despite being signed off on by the Canadian Radio, Television and Communications Commission earlier this year.

Analysts also suspect that opposition from the office will be an obstacle.

“Despite this apparent shift in the process, we continue to believe that the likelihood of a deal eventually getting approved remains high,” RBC Capital Markets analyst Drew McReynolds said in a note to investors on Sunday.

He believes there will be a number of things Rogers can do to address the office’s concerns and move the deal forward.

“We do not believe that the commissioner’s request is an indication that the Rogers-Shaw treatment cannot be processed, and we continue to believe that the Office of Competition is focusing on the nature of the treatment package rather than determining who should be that treatment partner,” he wrote.

Vas Bednar, executive director of the Master of Public Policy in Digital Society at McMaster University, said the office also had a “very poor track record on winning cases.”

Vas Bednar is Executive Director of the Master of Public Policy in the Digital Society Program at McMaster University. (Fez Bednar)

She noted the office’s move last year to try to block the proposed acquisition of Secure Energy Services Inc. Tervita is required to protect competition in the waste oil and gas services sector in Western Canada.

The competition court found that “irreparable harm to the competitive process and to the purchaser of services … was beginning to occur”, but let the merger go ahead anyway because Boswell could have satisfied only two of the three conditions needed to stop or even pause the deal.

Bednar, who believes Boswell was “an egg on his face,” believes this could happen again because she sees the case as an “uphill battle” with “the odds stacked against him.”

However, she said that even opposition to the deal shows the bureau is “doing its duty,” which may have shocked Rogers and Shaw.

“I think Rogers and Shaw’s attorneys underestimated the office’s teeth and ability…they thought this would pass and let’s be done with five years,” Bednar said.

“I think they were arrogant and seemed really surprised that they were opposing.”

Rogers and Shaw have 45 days to file a response to the competition court. Once these responses are received, the office must respond within 14 days.

2022-05-09 20:16:17

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