Quebecor’s Freedom purchase enough to establish fourth national competitor, Rogers tells Comp. Tribunal

Quebecor Inc.’s intent to purchase of Shaw Communications Inc.’s Freedom Mobile is enough to ensure its position as “an effective fourth wireless carrier” in Canada and ease the anti-competitive concerns raised over Rogers Communications Inc. acquisition of Shaw, the incumbent has argued to the Competition Tribunal. “The commissioner’s assertion that Freedom’s ability to compete ‘vigorously’ is dependent on leveraging Shaw’s wireline assets is wrong,” Rogers wrote in an Aug. 19 response to the Competition Bureau's submission to the tribunal. “It is not grounded in technical or commercial reality and ignores that Shaw operates Freedom as a stand-alone business, there is little relationship between Freedom and Shaw’s wireline business, and that relationship is conducted on arms-length commercial terms.” Rogers argued that Shaw provides no backhaul services to Freedom, where “the significant majority” of its wireless business is located, and that Shaw charges Freedom market rates for that access in western Canada. “A divested Freedom owned by Videotron would have the same or greater economic incentive to compete as it had when owned by Shaw,” Rogers wrote. Rogers said the bureau’s claims that competition will be harmed due to a lack of bundled wireless and wireline services is misleading. Rogers is arguing that “the relevant product market is not a bundled product” and “Freedom does not currently provide bundled services to a material number of its customers.” The deal between the three parties was announced in June for a purchase price of $2.85 billion. The announcement of the deal has thus far not been enough to satisfy the Competition Bureau, as Shaw and Rogers announced in early July that mediation sessions between the companies and the bureau had failed to produce an agreement. Wireless has long been seen to be the major sticking point of the deal, though the Competition Bureau’s submissions to the tribunal indicate a broader opposition to the merger. The divestiture agreement will see Videotron acquire all Freedom’s shares and the “transfer of all assets necessary for Videotron to continue operating Freedom’s wireless and wireline businesses on a standalone basis.” That includes all of its subscribers, spectrum licences, wireless core-network, cell sites and network infrastructure, backhaul microwave systems and contracts for backhaul with third parties at Freedom’s cell sites, its national and international third-party roaming agreements, contracts with Freedom dealers and franchisees and branded stores. Rogers will also provide Videotron with certain network access services “that will enable it to operate Freedom on a more cost-effective basis than Shaw could before the proposed divestiture.” Rogers claimed that the terms of the agreement coupled with Videotron’s ownership of 3,500 Mhz spectrum will put it in a better position to compete in Western Canada than Freedom ever was under Shaw’s ownership. “The Divestiture will also provide new opportunities for product differentiation, significantly boost Freedom’s 5G capabilities by adding Videotron’s valuable midband spectrum holdings, and fully address the commissioner’s concerns about any possible coordinated effects. This is particularly so given Videotron’s history as a disruptive competitor,” Rogers wrote. Any alleged anti-competitive effects arising from the merger will be “significantly outweighed" by the efficiencies gained, Rogers argued. It said such efficiencies were cost reduction from combining Rogers’ and Shaw’s wireline networks and operations, quality improvements from combining its wireline networks as well as Videotron and Freedom combining its wireless networks, labour-related savings, avoided costs related to retail operations and network infrastructure in British Columbia, Alberta, or Ontario. – Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and editing by Michael Lee-Murphy at mleemurphy@thewirereport.ca

Quebecor’s Freedom purchase enough to establish fourth national competitor, Rogers tells Comp. Tribunal

News | August 23, 2022

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Quebecor’s Freedom purchase enough to establish fourth national competitor, Rogers tells Comp. Tribunal

News | August 23, 2022

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