Dec 30, 2022
Rogers-Shaw: What’s next in the takeover saga?
The Rogers-Shaw takeover saga
Rogers’ historic $20-billion acquisition of Shaw Communications isn’t a done deal yet, though a late Thursday night Competition Tribunal decision approving the transaction takes the two telecom companies significantly closer to the end of the drawn-out takeover saga.
The telecom companies needed approval from Canada’s merger court in order to move forward with the transaction after a seven-month legal process, but there are a few hurdles the companies still need to clear to seal the deal, and unanswered questions remain about the sale’s impact on Canadian consumers.
COMPETITION BUREAU APPEAL
The Tribunal led by Chief Justice Paul Crampton didn’t accept the arguments presented by the Competition Bureau and its commissioner Matthew Boswell that the sale could lessen competition, raise the cost of cellphone bills and lead to poorer customer service.
But Boswell and his team have filed an appeal of the decision, a Competition Bureau spokesperson confirmed in an email to BNN Bloomberg on Friday.
Rogers and Shaw said in a written statement on Friday that they were “deeply disappointed” in the antitrust watchdog’s move to appeal the sale, which they argued would be advantageous for consumers.
Federal Industry Minister François-Philippe Champagne must also approve some segments of the sale.
A spokesperson for Champagne said in a statement to BNNBloomberg.ca that the government would review the decision in detail and “have more to say in due course.”
Champagne has made statements stressing that he wants to encourage telecom competition and lower wireless prices for Canadians, but also said he would ultimately endorse the Rogers-Shaw sale with some conditions in place. Those include agreeing to sell Freedom Mobile to Quebecor, and lower wireless prices in Ontario and Western Canada by about 20 per cent.
University of Ottawa professor Jennifer Quaid, who specializes in competition law, said in a Friday interview with BNNBloomberg.ca that it’s unlikely that Champagne will reject the deal given that he has already publicly said what he intends to do, and the companies involved appear poised to meet his conditions.
“I don't think there's much uncertainty in terms of the minister's approval,” she said.
Competition lawyer Michael Osborne, chair of the Canadian competition practice at law firm Cozen O’Connor, said he doesn’t expect Champagne will “second-guess the tribunal” by imposing more conditions on the sale.
“I expect the approval to come very quickly. And no, I don’t expect any further conditions,” Osborne said in a television interview with BNN Bloomberg on Friday.
TIMELINE OF THE SALE
The tribunal decision represents the biggest legal hurdle the companies had to overcome, Quaid said, and it clears the way for them to work on finalizing the deal.
Rogers and Shaw first announced the proposed takeover in March 2021, and Rogers said in a Friday statement that it would extend the date of the transaction to Jan. 31, 2023.
Both companies said they were “pleased” with the decision and pledged to work with Champagne on the final approval process.
WHAT DOES IT MEAN FOR CANADIANS?
A summary of the tribunal decision published Thursday said the Rogers-Shaw acquisition was “not likely to prevent or lessen competition substantially,” and “not likely to result in materially higher prices” for consumers.
Still, some experts share the fears raised by the Competition Bureau in its bid to block the sale – that with less competition in the sector to drive down prices, everyday people could see the impact of the transaction play out on their monthly cellphone bills.
“I think many people are anticipating that prices will eventually either go up disproportionately or just go up in a way that competition doesn't properly correct for,” Vass Bednar, executive director of McMaster University’s master of public policy program, said in a phone interview with BNNBloomberg.ca on Friday.
While Champagne and the federal government have outlined conditions intended to lessen consumer impacts, Quaid said there isn’t a good mechanism in place to enforce them.
“The conditions that the minister expects, they all sound great, I'm just not sure how easy it's going to be to verify that they're being done and to do anything about it if they're not being followed,” she said. “This is kind of a wish list, and they just hope that there'll be some sort of desire to avoid public backlash.”
Bednar and Quaid both pointed out that the decision in the high-profile antitrust case has come at a pivotal moment for competition policy in Canada, as the government is currently holding consultations on the future of the country’s competition laws.
As Canadians grapple with cost of living increases from high inflation and rising interest rates, Bednar said people are highly sensitive to the consumer prices impacts of limited competition in sectors like telecom and grocery stores – an area the Competition Bureau is also currently probing.
Bednar said customers could end up leaving Rogers to voice their displeasure with the sale. The ongoing competition policy review also presents an opportunity for those frustrated with how the case has played out to share their perspectives, she said, as “the moment is kind of here for Canada to reform its competition laws.”
“How this merger went through isn't necessarily emblematic of how the laws themselves are weak, but many people are saying this is further proof that Canada has overly weak merger control,” she said.
Quaid said she is also closely watching to see whether the “galvanizing” Rogers-Shaw case, focused on the longstanding issue of hefty wireless prices in Canada, motivates people to share their views on a usually dense area of public policy.
“It made what can sometimes be a pretty abstract thing very concrete for people,” she said of the case. “What I am curious to know is, will it make them angry enough or motivated enough to contribute to the consultation?”