UPDATED: Rogers comes out victorious in competition challenge over Shaw buyout

Canada’s Competition Tribunal is dismissing the Commissioner of Competition’s application to block Rogers Communications Inc.’s takeover of Shaw Communications Inc.

The tribunal released its summary decision late-Thursday evening, removing the last barrier in the $26 billion deal.

The core issue in the proceeding was whether or not the plan to sell Shaw’s main wireless brand to Quebecor Inc.’s Videotron is good enough to maintain a competitive market.

It bears underscoring that there will continue to be four strong competitors in the wireless markets in Alberta and British Columbia,” the tribunal wrote, referring to  BCE Inc., Telus Corp., Rogers and Videotron.

“Videotron’s entry into those markets will likely ensure that competition and innovation remain robust. Among other things, Videotron has a proven record of aggressive pricing and innovation in Quebec and parts of Eastern Ontario.”

“The Tribunal has concluded that the evidence establishes that the bundled offerings of Freedom and VMedia will likely be priced at a level that is at least as competitive as the level at which the bundled offerings of Shaw Mobile and Freedom likely would have been priced in the absence of the merger,” the summary decision reads.

In a joint statement released in the early hours of Friday morning, the Shaw and Rogers wrote that “we are pleased with the favourable decision from the Competition Tribunal and thank the Tribunal members for their work in rendering a swift decision. ”

“We look forward to reviewing the details of the decision and working with the Minister of Innovation, Science and Industry so we can clear the final regulatory hurdle to close these transactions,” the joint statement read.

The tribunal will issue a public version of its full decision within approximately 48 hours, it noted. Commissioner of Competition Matthew Boswell said the Competition Bureau is considering its next steps and that he is disappointed with Thursday’s developments.

In releasing its decision in the final days of the 2022 calendar year, the Competition Tribunal acceded to the request of Rogers for an expedited decision in order to save the company from having to pay some $260 million in fees to bondholders on Jan. 9.

Competitive Network Operators of Canada (CNOC) executive director and general counsel Geoff White told the Wire Report that the remonopolization of Canada’s telecommunications sector will continue “full steam ahead” unless the CRTC – which is now working under a new chair with a new policy direction – restores the wholesale access framework.

“It is more important than ever as a check on incumbents’ market power,” he said.

 In the last year, Bell has acquired Distributel Ltd. and Ebox Inc. while Quebecor also acquired VMedia Inc.

“Today was the last nail in the coffin of telecom affordability in a dismal 2022,” said OpenMedia Campaigns Director Matt Hatfield said in a Thursday statement. “Experts, MPs and ordinary Canadians all know it: this buyout means higher prices and fewer choices, in a telecom market that’s already far too concentrated.”

In a Friday stastement Globalive, the investment firm associated with former Freedom Mobile hopeful and former Wind Mobile owner Anthony Lacavera, criticized the tribunal’s decision. “Sadly, it’s no surprise that the Competition Act, which has failed to protect Canadians from every anti-competitive merger for the past 40 years, has failed us yet again,” the statement read.

“The government must step in to stop this merger, and oversee a fair, open, and transparent process to sell the Freedom Mobile wireless assets and ensure the best outcome for Canadians.”

Competition policy observers also sharply criticized the decision. Researcher and co-founder of the Canadian Anti-Monopoly Project (CAMP) Robin Shaban wrote in an email to the Wire Report that she was not surprised by the decision. “This decision follows in the footsteps of others that have been reviewed by the Bureau or evaluated by the tribunal,” Shaban wrote.  “Specifically, the deal with Videotron has been designed to allow this deal to pass under our law. Most problematic mergers under the Competition Act are permitted because the merging parties make deals like this where they divest assets to a third party in order to ‘preserve competition’.”

Shaban said that the decision will have a “substantial bearing” on the ongoing review of the Competition Act.

Shaban’s CAMP colleague Keldon Bester wrote in an email that the government can still take steps in favour of the public interest. “At a minimum this should include more aggressive price targets based on international benchmarks, a concrete timeframe for meeting the targets, and meaningful consequences for not doing so,” Bester wrote.

Analyst reaction turned to the possibility of Rogers’ getting subsequent required approvals from the department of Innovation, Science, and Economic Development (ISED) by the end of the year, and whether or not Rogers’ will have to pay more money to its creditors.

 More to come

-Reporting and editing by Jenna Cocullo at jcocullo@thewirereport.ca and Michael Lee-Murphy  at mleemurphy@thewirereport.ca 

Northwestel may provide FTTP services 35% below price floor and discount to Wholesale Connect: CRTC

The CRTC approved an application by BCE Inc.’s Northwestel to modify the tariff approval process for the company’s terrestrial retail residential internet services by allowing the company to discount Wholesale Connect and to provide existing and new fibre-to-the-premise (FTTP) internet services, at most, 35 per cent below the price floor without a cost study.

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Vicky Eatrides appointed new CRTC chair; consumer advocates pleased

Minister of Canadian Heritage Pablo Rodriguez Monday morning announced the appointment of Vicky Eatrides as the incoming chair of the CRTC. 

Eatrides’ five-year term is set to begin on Jan. 5, after a three year stint as assistant deputy minister at the department of Innovation, Science, and Economic Development. The ISED official also has an extensive background in the Competition Bureau, and has over a decade of experience at Canada’s competition watchdog, where she “developed expertise in telecommunications, broadcasting and new technologies by leading merger reviews, civil and criminal investigations, and regulatory interventions,” according to a release. 

Alongside Eatrides’ appointment, Rodriguez also announced the appointment of Alicia Barin and Adam Scott as vice-chairpersons at the regulator for their own five-year terms. 

“The CRTC has an important mandate to deliver for Canadians. Technology has fundamentally changed how we communicate with each other and how we create and consume culture,” Rodriguez said in a release.  “The new leadership team at the CRTC will help modernize the  regulator and stand up for Canadians and for our creative professionals.”

“The CRTC will undoubtedly benefit from the shared digital, broadcasting and telecommunication expertise that these leaders will bring to the table,” he said. 

In a Monday email to the Wire Report, Competitive Network Operators of Canada (CNOC) executive director and general counsel Geoff White wrote that his organization is “pleased with today’s appointments, and heartened the Chair has expertise in competition issues because restoring the hope of competition is job number one for the CRTC on the telecom file.”

“We are optimistic that 2022 will bring a sharp course correction at the CRTC, which has let the industry effectively re-monopolize, and charge Canadians way too much for home internet and wireless services,” White wrote. 

For Public Interest Advocacy Centre executive director and general counsel John Lawford, Eatrides’ appointment is a “signal to the telecom industry that all the files that are being held up or are being mismanaged, to be frank, like wholesale internet and MVNOs – you’re going to have somebody in there who understands the competition environment.” 

In a phone interview with the Wire Report, Lawford said that Eatrides’ appointment was “complementary” to the Government’s May policy direction to the CRTC, and that the appointment “seems to be saying that the present market structure – and probably future market structure post Rogers-Shaw – of the telecom industry needs some anti-trust attention.”

In a Monday afternoon note, National Bank analyst Adam Shine wrote that despite the initial 2019 decision to lower rates for third-party internet access (TPIA) – a decision that the regulator eventually reversed – “decisions by Ian Scott’s CRTC appeared to tend to skew in favour of the industry.”

“We’ll now see if the new chair’s regime will prove more neutral or lean more to taking positions that are more pro-consumer,” Shine added. “The latter need not cast an overhang over the Canadian telecommunications industry, and we don’t expect to see retail pricing regulated for broadband or wireless, but there are other areas where the CRTC might seek to explore pockets of savings for consumers that we’ll need to monitor carefully as to their possible impact on segment growth rates.” 

In a phone interview with the Wire Report, Canadian Association of Wireless Internet Service Providers executive director John Black said the move will bring “fresh thinking to competition in the industry” and hailed the fact that Eatrides “doesn’t come with an existing provider.”

“Competition is clearly on the radar screen of everyone in the industry. And I think this is a strong statement that it continues to be an issue and an area of concern.”

Black said he is also excited about Scott’s appointment as vice-chair because of his understanding of spectrum policy even though the department of Innovation, Science and Economic Development is responsible for the regulation of the resource. 

TekSavvy Solutions Inc. vice-president of regulatory and carrier affairs Andy KaplanMyrth said moving away from a commissioner tied to industry was a smart move in the current environment.

“I think that given how much trouble the CRTC seems to be in right now – and at least the perception that they’re too close to industry – I think makes this a smart move,” he said in a phone interview with the Wire Report.

“There’s a lot of people there. There’s a lot of process. I don’t think in a bureaucracy one or two new people, even at the head, alone can change the direction of everything. But I think it moves in the right direction,” Kaplan-Myrth said.

Kaplan-Myrth said on the telecom side, this is “as good of a way to clear the slate and give the CRTC a fresh start.” 

Canadian Association of Broadcasters president Kevin Desjardins told the Wire Report in a  phone interview that the new chair will bring an innovative and forward thinking  approach to the broadcasting sector. 

“In terms of regulating these rapidly changing lines of business, especially in broadcasting and media, we are hopeful the commission is able to move beyond some of its attachments to past practices, in terms of the regulation of our sector,” he said.

“We’re very hopeful that with the great experience and tremendous reputation that the new chair is bringing to the job, that she will be able to lead the commission through the implementation of Bill C-11,” he said.

Eatrides’ “background in competition and telecommunications policy will play an important role in the Commission’s work to help bridge Canada’s digital divide,” Canadian Internet Registration Authority president and CEO Byron Holland said in a Monday statement. 

Holland also congratulated Adam Scott, who he noted in the statement was a former CIRA board advisor. 

In its own statement, advocacy group OpenMedia praised the new hires. “Our last CRTC made our affordability problems worse, refusing to introduce services-based competition and even endorsing the Rogers-Shaw deal that every other government body judged as harmful,” campaigns director Matt Hatfield said in the statement. “The critical eye of a pro-competition chair could be exactly what we need to get the CRTC to open the doors to mobile virtual network operators (MVNOs) and wholesale Internet competition, which helps lower prices in many other countries.”

 

-Reporting by Jenna Cocullo at jcocullo@thewirereport.ca and Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca 

 

CRTC’s regulatory policy plays central role in Rogers-Shaw closing arguments

In the drama that has unfolded in front of the Competition Tribunal over the past month, as the tribunal hears arguments on whether or not it should approve Rogers Communications Inc.‘s $26 billion plan to buy Shaw Communications Inc., an unexpected character has been the CRTC’s third-party internet access (TPIA) regime. 

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