Rogers-Shaw decision a ‘watershed moment’ either way, the parties agree in closing arguments

Nearly a month of evidence from industry experts, analysts, economists, and corporate executives shows three distinct themes, according to final written arguments from the Competition Bureau submitted Thursday to the Competition Tribunal and released Friday. First, Shaw Communications Inc. has been an aggressive and innovative wireless competitor in western Canada through both its Shaw Mobile and Freedom Mobile brands, with a presence that was eating into Rogers Communications Inc.'s business. Second, Shaw's innovation and growth has stopped since Rogers and Shaw announced their intention to merge in March of 2021. Third, the plan to sell Shaw's main wireless brand to Quebecor Inc. is not good enough to alleviate the lessening of competition. For Rogers, on the other hand, the weeks of testimony "exposed" the Competition Bureau's argument that Quebecor's VIdeotron, after picking up Shaw's divested Freedom Mobile, would not be an effective competitor in the west. On the contrary,the company argued in its own final argument, the merger of Rogers and Shaw with Freedom divested to Quebecor will increase competition in the west by giving consumers three providers of bundled services (Telus, Quebecor, and Rogers) instead of two (Telus and Shaw). Which side of the argument the three-judge Competition Tribunal panel comes down on is a "watershed moment for wireless competition in Canada," the parties agree, though to different ends. In the opening of its argument, the Competition Bureau points to Shaw's decision to pull out of 2021's 3,500 MHz spectrum auction, widely seen as crucial to 5G network development and expansion. "The prospect of competitive growth, further innovation, of more pressure on the Big 3, was brought to a halt as a result of the Proposed Merger," the bureau wrote. "The evidence from Shaw’s own witnesses at the hearing is clear: Shaw’s 5G roll-out and 3500 MHz purchase were shelved as a direct result of it." "The impact of this development alone on Canadian wireless competition cannot be overstated." Since the announcement of the merger, Shaw has shifted to a "middle lane" strategy, the bureau continued, arguing that the strategy "brought price increases, reduced promotions, plummeting device subsidies and curtailed capital spending." The developments since the announcement of the merger amount to a "clear substantial prevention and lessening of competition," the bureau wrote, using language from the Competition Act that stands as grounds to reject a merger. Quebecor's acquisition of Freedom Mobile as part of the deal, the bureau argued, "would create an unprecedented relationship of dependence between a Big 3 competitor and a much smaller regional player, a regional player without a track record in, or detailed market knowledge of, Western Canada." Rogers' presentation of an agreement for favourable conditions for Quebecor in the wake of a Freedom divestiture "is inimical to competition law," the bureau wrote, arguing that the law "eschews behavioural relief in favour of structural remedies to avoid imposing a monitoring burden and increase the likelihood of an enduring remedy." What's more, the bureau sought to emphasize, the tribunal must rule on the proposed divestiture and merger without reference to what the bureau called "behavioural relief." "It must accept or reject the Proposed Divestiture without further terms." The agreement between Rogers and Quebecor, Rogers countered in its submission, makes the agreement a part of the company's argument that the deal would ultimately increase competition in the west. "Every witness with knowledge of the Canadian market confirmed that the backhaul arrangements between the two companies are industry standard—except these contain more favourable terms for Videotron," Rogers wrote. "Videotron has made clear it has all the assets and arrangements necessary to vigorously compete. There is no basis to reject its reasoned business judgment." The respective parties are set to present their closing arguments to the Competition Tribunal on Dec. 13 and 14. –Reporting by Michael Lee-Murphy at mleemurphy@thewirereport.ca and editing by Paul Park at ppark@thewirereport.ca

Rogers-Shaw decision a ‘watershed moment’ either way, the parties agree in closing arguments

News | December 9, 2022

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Rogers-Shaw decision a ‘watershed moment’ either way, the parties agree in closing arguments

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