Rogers, Shaw Make Gains as High-Stakes Court Hearing Begins

Randy Thanthong-Knight, Bloomberg News

A Shaw store in the Pacific Centre shopping mall in Vancouver, British Columbia, Canada, on Tuesday, Sept. 6, 2022. Rogers Communications Inc. is still waiting to see if it can win regulatory approval for a takeover of a smaller Canadian cable company, 17 months after it was first announced. , Bloomberg

(Bloomberg) -- A lawyer for Shaw Communications Inc. accused a rival company of working with Canada’s competition czar to try to kill its sale to Rogers Communications Inc. and keep it at a competitive disadvantage.

The statement from Shaw lawyer Kent Thomson came in the first day of court hearings into the C$20 billion ($14.8 billion) deal. Competition Commissioner Matthew Boswell is suing to block the transaction, which would unite two of Canada’s largest telecommunications firms.

Shaw competitor Telus Corp. “has promoted the commencement of these proceedings by the commissioner -- in fact lobbied him to do so,” Thomson said Monday during opening arguments. “Telus is not seeking to enhance competition. It seeks to limit it.” A spokesperson for Telus did not reply to a request for comment.

Rogers rose 1.5% and Shaw was up 0.6% in Toronto trading, while Telus and BCE Inc. both declined.

Shaw and Telus are the largest providers of cable television and internet service in the provinces of Alberta and British Columbia, but Telus has performed better and taken significant market share, leaving Shaw a weakened company. The Shaw family decided to sell to Toronto-based Rogers in March 2021.

Thomson’s comments underscore a key argument Rogers and Shaw will make in court: that consumers will actually be better off once Shaw sells its cable division to Rogers and most of its wireless business to Montreal-based Quebecor Inc. in separate transactions. The deals will allow the companies to upgrade networks in Western Canada and offer better prices and service, they claim.

Boswell, on the other hand, will have to prove to the Competition Tribunal that the deals are likely to reduce competition, rather than enhance it.

Read more: Rogers Finally Gets Its Day in Court to Rescue Shaw Takeover

“The case comes at a watershed moment for wireless competition in Canada and presents the following question: Will Canada continue to see the growth of strong regional facilities-based competitors like Shaw?” said John Tyhurst, a lawyer for the Competition Bureau. “Or will it see weakened and dependent wireless competition, in the form of the proposed divestiture of Freedom to Videotron?”

Freedom Mobile is the name of the division that includes most of Shaw’s wireless assets. Quebecor does business under the Videotron brand.

Rogers’ lawyer Jonathan Lisus argued that the deal is in fact “pro-competitive,” adding: “I think we all agree that the stakes could not be higher.”

The case continues Tuesday and will run for several weeks, with closing arguments scheduled for Dec. 13 and Dec. 14.