Rogers-Shaw deal would cause ‘severe vulnerability’ for Videotron, watchdog argues

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Ottawa denies transfer of Shaw wireless spectrum, threatening Rogers merger
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A lawyer representing Canada’s competition watchdog says Rogers Communications Inc. and Shaw Communications Inc.’s plan to sell Freedom Mobile to Quebecor Inc.’s Videotron will put Videotron in a position of “severe vulnerability.”

John Tyhurst made the argument before the Competition Tribunal today, saying it will create a relationship of dependence between a big three telecom company and a much smaller, regional player that will have to count on Rogers’ goodwill to compete.

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Tyhurst suggested the deal’s potential to make Videotron vulnerable to Rogers should be enough to scuttle the $26-billion sale of Shaw to Rogers.

Rogers and Shaw floated the Freedom sale earlier this year in an attempt to ease concerns raised by the Competition Bureau.

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However, Tyhurst says the deal would be accompanied by a complex web of 13 agreements reminiscent of the type of agreement that is routinely rejected by competition law and that could increase the odds of coordination between the two, if Videotron fears retaliation.

Tyhurst’s remarks were part of the final stage of arguments he will make on behalf of the Competition Bureau in a hearing meant to decide whether Roger and Shaw will be granted approval for their deal.

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