Rogers-Shaw deal: Analyst says watchdog faces ‘uphill battle’ to overturn ruling

The Federal Court of Appeal will hear the Competition Bureau’s appeal of a decision that cleared the way for Rogers Communication Inc.’s takeover of Shaw Communications Inc. on Jan. 24.

The Competition Bureau is appealing the Competition Tribunal’s dismissal last week of its efforts to block the $26-billion deal, stating the tribunal made fundamental errors of law. The bureau on Monday secured a temporary, emergency stay to halt the deal until the Federal Court of Appeal hears its case.

Jonathan Lisus, a lawyer representing Rogers, said Tuesday that a formal order for the hearing date will come Wednesday but that the Commissioner of Competition will have to submit its case by Jan. 13 while the companies will have until Jan. 17 to respond.

In a filing to the appeals court, Rogers and Shaw pushed for an expedited appeals process as they still look to close the deal by their already extended Jan. 31 deadline.

The two companies said in their submission that if the deal were to go beyond the date there is a “real risk that the transaction will not close in its current form, or at all.”

The Competition Bureau faces an “uphill battle” in its effort to overturn the Competition Tribunal’s dismissal of its case against Rogers Communications Inc.’s $26-billion takeover of Shaw Communications Inc., an analyst said Tuesday.

While the federal competition regulator has secured a temporary, emergency stay from the Federal Court of Appeal to halt the deal, there are still multiple paths ahead to closing it, said RBC analyst Drew McReynolds in a note.

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“While the timing of the deal closing continues to be somewhat uncertain, we believe each of the three companies remains committed to the transactions and that there is a high likelihood that the transactions close.”

Possible paths to closure include denial by the Federal Court of the bureau’s appeal, denial of a halt to the deal before an appeal is heard, and an expedited appeal process that could see a decision issued by mid-2023.

McReynolds said that while he is confident the deal will be approved, potential avenues that may scuttle it include a bureau win at the Federal Court of Appeal, or in the case of a loss, lengthy delays brought on by leave for the bureau to appeal to the Supreme Court of Canada. There is also the potential for the department of Innovation, Science and Economic Development Canada to reject it.

In pushing for the appeal, the Competition Bureau said the tribunal made a mistake in how it assessed the deal and the proposal that would see Quebecor Inc.’s Videotron acquire Shaw’s Freedom Mobile business.

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In seeking its appeal, the regulator said the tribunal made fundamental errors of law.

In its ruling last week, the tribunal said the merger was not likely to result in higher prices for wireless customers and that it was satisfied the plan to sell Freedom Mobile was adequate to ensure competition isn’t substantially reduced.

The bureau said the temporary suspension of the tribunal decision will hold until the regulator’s application for a stay and an injunction can be heard, a date for which has not yet been set.

Rogers and Shaw made a joint statement Friday noting their deep disappointment in the bureau’s efforts to block the deal but they remain committed to seeing it through.

The bureau had argued that the merger of the two telecommunications companies would lessen competition, trigger higher prices and lead to a worsening of service.