Rogers and Shaw Fail to Resolve Antitrust Dispute Over Merger

Randy Thanthong-Knight, Bloomberg News

Tony Staffieri, president and chief executive officer of Rogers Communications Inc., left, and Ron McKenzie, chief technology and information officer of Rogers Communications Inc., during a Standing Committee on Technology and Industry hearing in Ottawa, Ontario, Canada, on Monday, July 25, 2022. Rogers expects to spend C$10 billion ($7.7 billion) over the next three years to improve network reliability after a massive outage this month, Staffieri said in a letter to customers seen by the Globe and Mail. , Bloomberg

(Bloomberg) -- Rogers Communications Inc. failed to settle a dispute with Canada’s antitrust watchdog about its takeover of Shaw Communications Inc. during mediated talks, almost certainly sending the parties to court.

The companies said they’re committed to the deal and are confident of their chances in litigation. That step is scheduled to begin next month, with Rogers, Shaw and the Competition Bureau making their arguments in front of the federal Competition Tribunal.

At stake is one of the largest mergers in Canada’s history -- a C$20 billion ($14.7 billion) deal to unite Rogers, the country’s largest wireless and cable firm, with Shaw, a major provider of cable and internet services in the western provinces.

Rogers and Shaw tried to appease antitrust regulators by striking a deal to sell Shaw’s Freedom Mobile division to Montreal-based communications company Quebecor Inc. That wasn’t enough for the Competition Bureau, which has argued in court documents that Freedom will be a weaker competitor under new ownership and consumers are likely to pay higher prices.

“We are disappointed with this outcome and believe that litigation is both unnecessary and harmful to competition. The Bureau’s unwillingness to meaningfully engage unduly delays lower wireless prices for Canadian consumers,” Rogers, Shaw and Quebecor said in a joint statement late Thursday.

Earlier this week, Industry Minister Francois-Philippe Champagne signaled his support for the asset sale to Quebecor by setting out two conditions for his approval of it.

Shaw shares jumped 7% on Wednesday, as traders saw Champagne’s intervention as making the deal more likely to happen. Rogers rose nearly 6% that day and another 1% on Thursday.

Freedom Mobile is the country’s fourth-largest wireless provider, competing against Rogers, BCE Inc. and Telus Corp. in Ontario and Western Canada.

“We remain committed to completing this pro-competitive series of transactions and are confident in the strength and merits of our case in front of the Competition Tribunal, including the many benefits of these transactions to Canadians,” Rogers, Shaw and Quebecor said in their statement.

More than 85% of Canada’s wireless market is controlled by the three largest providers. Smaller regional companies like Freedom, Quebecor and Saskatchewan Telecommunications Holding Corp. have the rest.

(Adds additional context from companies statement, share prices.)