UPDATED: Quebecor files complaints to Comp. Bureau against Bell’s alleged abuse of dominance in internet market

Quebecor Inc.’s Videotron and its subsidiary VMedia have lodged two formal complaints with the Competition Bureau, urging an investigation into BCE Inc.'s alleged abuse of dominant position in the high-speed internet access (HSA) services market and with its telecommunications transport service contracts. The complaint, issued Tuesday, accuses Bell of engaging in margin squeeze practices aimed at stifling competition from internet access resellers. It alleges that Bell, while advocating to maintain wholesale rates at high levels before the CRTC, is bypassing its reseller and selling retail internet access directly to consumers at prices significantly lower than those wholesale rates. According to the complaint, obtained by The Wire Report, Bell's actions are perceived as a deliberate effort to eliminate competition from resellers and maintain retail prices at supra-competitive levels, thereby adversely affecting Canadian consumers. It cites Section 78 and 79 of the Competition Act, highlighting Bell's conduct as a classic case of margin squeeze by a vertically integrated supplier. In an email statement a Bell spokesperson said the company has not officially been notified of the complaint but "Bell competes in fair manner and follows all regulations." "As always, we will collaborate with the Competition Bureau." According to the complaint, Bell is undermining the CRTC's objectives outlined in its November 2023 decision that mandated large incumbent telephone companies to provide wholesale access to their FTTP networks in Ontario and Quebec on an interim basis. Bell responded to the decision by reducing its network investments by $1 billion in 2024-2025. The company is also appealing the decision on the grounds of legal error and jurisdictional overreach and petitioned cabinet to override the CRTC. According to the complaint, Bell's pricing strategy exhibits significant regional disparities, evident in Ontario and Quebec compared to other Canadian cities. The incumbent, according to Quebecor, is leveraging its dominant position in these regions to offer internet services at substantially lower prices than elsewhere in the country. Quebecor notes that service for customers cost $60 per month in Montreal while while consumers in other Canadian cities see a price tag of $135 per month. This disparity, according to the complaint, is an attempt by Bell to manipulate pricing dynamics to its advantage and stifle competition in markets where it faces potential threats from other providers. By offering significantly lower prices in specific regions like Ontario and Quebec, Bell is effectively creating barriers for new entrants and undermines the ability of existing competitors to compete on a level playing field, Quebecor maintains. Quebecor uses VMedia as a case study, noting that in the Toronto-Adelaide sector Bell's pricing strategies create significant challenges for the new entrant. While the CRTC sets a standard wholesale rate of $121.79 per month for FTTP services in unbundled mode, Bell offers retail services at 1.5 Gbps for $50 per month in the same sector. VMedia, in its efforts to enter the market competitively, must offer a comparable service at a lower price point, selling it for $45 per month. However, this pricing strategy is leading VMedia to incur substantial losses, amounting to a net loss of $92 per customer monthly and more than $1,100 annually, Quebecor argued. Quebecor’s other complaint accuses Bell of leveraging its position to impose exorbitant rates on Videotron for network usage. With Bell's fiber transport network being crucial for connecting Videotron's commercial clients, Quebecor claims that Bell's practices stifle competition and undermine consumer interests. According to the complaint, Videotron finds itself forced to abandon certain customers due to lack of profitability. In September 2007, Bell entered into the Master Agreement for Untariffed Communications Services with Fibrenoire, a company specializing in fiber optic connectivity services for businesses. Within this agreement, Bell imposed stringent conditions, including a requirement for Fibrenoire to commit to paying a minimum annual income, irrespective of its actual network usage. Over the years, as the agreements between Bell and Fibrenoire expired and were subject to renewal cycles, Bell allegedly exploited its dominant position in the market to coerce Fibrenoire into accepting terms that favored Bell's interests. These terms often included minimum revenue commitments significantly exceeding Fibrenoire's actual network usage, all under the implicit threat of imposing rate increases or punitive measures. -- Reporting by Jenna Cocullo at jcocullo@thewirereport.ca. This story has been updated with comment from BCE Inc.

UPDATED: Quebecor files complaints to Comp. Bureau against Bell’s alleged abuse of dominance in internet market

News | February 28, 2024

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