Rogers says bureau’s opposition of Shaw merger goes against evidence in new filing

Rogers and Shaw applications are pictured on a cellphone in Ottawa on May 9, 2022. Rogers says the Competition Bureau's opposition to its proposed takeover of Shaw is not supported by the evidence in its filing challening the bureau's stance. THE CANADIAN PRESS/Sean Kilpatrick. skp

Rogers Communications Inc. says the Competition Bureau’s opposition to its proposed takeover of Shaw Communications Inc. is not supported by the evidence.

The Friday filing by the telecom giant comes in response to the competition commissioner’s announcement in early May that the agency was seeking to block the $26-billion merger over concerns the deal would “substantially prevent or lessen competition in wireless services.”

Rogers says that the commissioner has failed to properly assess the quantifiable effects of the merger, and to properly weigh the efficiencies the transaction offers.

The company also says its offer to divest Shaw’s wireless division under the Freedom brand should largely address the commissioner’s concerns about competition.

“To the extent the transaction would generate any alleged competitive effects, those would be fully eliminated by the proposed divestiture of Freedom,” Rogers wrote in its filing.

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The commissioner, however, said in its May filing to block the deal that the proposed sale of Freedom would not be enough to address the reduced competition the merger would bring, arguing among other things that by selling Freedom, Shaw would be unable to bundle such services with its wireline business.

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Rogers says the benefits of Shaw’s wireline business to Freedom are minimal, and that the wireless provider operates as a stand-alone business.

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The company says the commissioner’s efforts to block the transaction regardless of divestitures are unreasonable as well as contrary to both the economics and facts presented to the bureau.

In opposing the deal, the commissioner said that since entering the market in 2016 with the acquisition of Freedom, Shaw has driven down wireless prices and made wireless data more accessible, and that a sell-off of the wireless company would reduce those beneficial effects.

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The commissioner also said that the proposed deal with Rogers had already stifled Shaw’s competition in the market, including a pullback in plans to expand to new markets, acquire more wireless spectrum, and expand its wireless services to businesses.

Rogers says in its filing that the supposed competitive effects of Freedom moving into business services are unsupported, while the commission is wrong when it asserts Shaw would have made the necessary investments to be a competitive force in the 5G wireless spectrum.

“When faced with the prospect of making those significant capital investments, Shaw chose instead to sell.”

The company also says that a divested Freedom would be just as well-placed to compete as it would have the same spectrum, towers and other operating assets.

“A divested Freedom would have the same or greater economic incentive to compete as it had when owned by Shaw.”

The Competition Bureau now has 14 days to reply to Rogers’ filing. Both Rogers and Shaw agreed this week not to close the merger until objections by the Competition Bureau are resolved.

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