Shaw Hits Back Against Canadian Watchdog During Trial

Shaw Communications is pushing back against Canada’s competition watchdog, arguing that a full block of Rogers Communications’s $26-billion proposed takeover would set the telecom industry back a generation. 

In its opening arguments on the first day of a weeks-long public hearing before the Competition Tribunal, Shaw called the Competition Bureau’s desire to prevent the deal from happening a “dramatic overreach.”

Earlier in the day, the regulator reinforced its opposition to the takeover and intention to fully block it.

In the Competition Bureau’s opening arguments Monday, it reiterated its position that the planned sale of Shaw-owned wireless carrier Freedom Mobile to Quebecor Inc.’s Videotron Ltd. is not enough to eliminate its concerns that the broader merger would lead to worse services and higher prices for consumers.

The sale of Freedom Mobile to Videotron would see Quebecor buy all of Freedom’s branded wireless and internet customers as well as all of Freedom’s infrastructure, spectrum and retail locations in a move that would expand Quebecor’s wireless operations nationally. Quebecor agreed to buy Freedom in a $2.85 billion deal earlier this year.

The regulator said separating Freedom from Shaw would make it a diminished competitor because it would remove Freedom’s access to certain shared human resources and synergies the company “has enjoyed” as part of Shaw.

It said the divestiture would not replace the “vigorous” competitive presence offered by Shaw.

The Competition Bureau said the sale would create a situation where Videotron is likely to be more “aligned” with Rogers and more vulnerable to anti-competitive actions by Rogers.

Additionally, the regulator said that barriers for Quebecor to enter a new market are high. Videotron only operates in Quebec and a small part of Ontario.