Earlier in the day, the regulator reinforced its opposition to the takeover and its intention to block it entirely. In the Competition Bureau’s opening arguments on Monday, it reiterated its position that the planned sale of Shaw-owned wireless communications company Freedom Mobile to Videotron Ltd. of Quebecor Inc. not enough to allay its concerns that the broader merger would lead to worse service and higher prices for consumers. The sale of Freedom Mobile to Videotron would see Quebecor purchase 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 to national level. Quebecor agreed to buy Freedom in a $2.85 billion deal earlier this year. The regulator said that separating Freedom from Shaw would make it a diminished competitor because it would take away Freedom’s access to certain shared human resources and synergies that the company “has enjoyed” as part of Shaw. He said the divestment would not replace the “dynamic” competitive presence Shaw offers. 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. Rogers disputed this claim in his opening arguments, saying that reliance on Rogers is “far from reality”. Rogers said the Competition Bureau’s view of Videotron was “problematic”. He said the regulator is underestimating Videotron’s “abilities and capabilities” and discounting its success in Quebec. Rogers added that the planned sale of Freedom to Videotron would create an “empowered” competitor in the wireless market and asked rhetorically why Quebecor would choose to spend nearly $3 billion to acquire a business doomed to fail. In addition, the Competition Bureau said the barriers to entry for Videotron in a new market are high. Videotron only operates in Quebec and a small part of Ontario. Barriers include the challenge of acquiring spectrum, which is scarce and expensive, building infrastructure, retail distribution and attracting customers, the Competition Bureau said. He also noted that even with the sale of Freedom, Rogers will still acquire customers from Shaw Mobile. In his opening arguments, Shaw called the Competition Bureau’s desire to prevent the deal from happening “dramatic overreach”, adding that blocking the deal would set the telecoms industry back a generation. Shaw said that Rogers would never own or manage Freedom, explaining that Videotron would acquire Freedom before Rogers and Shaw merged. Shaw added that Freedom has operated as a standalone company that can be “easily” and “cleanly” separated and sold. The company also said Videotron would become a more viable competitor than Freedom is now, especially since the sale would allow Freedom to offer 5G services, which it has failed to do. In a separate decision last month, Minister Francois-Philippe Champagne imposed new conditions on the Rogers-Shaw deal, specifically targeting the sale of Freedom to Videotron. Champagne — who as innovation, science and industry minister must approve any transfer of spectrum licenses — left the door open to a revised deal, saying it had two key conditions. He said Videotron would have to agree to keep Freedom’s wireless licenses for at least 10 years. He also said he would “expect to see” wireless prices in Ontario and Western Canada drop by about 20 percent, bringing them in line with Videotron’s current offerings in Quebec. In response, Quebecor said it would accept the terms, agreeing to incorporate them into a revised agreement. In his opening arguments, Shaw also argued that the Rogers-Shaw deal would increase competition, not decrease it, particularly in western Canada, because Rogers’ size, scale and resources are significantly greater than Shaw’s but relatively equal with Telus, which dominates this place. of the country, thus placing Telos and Rogers on an equal footing. The Competition Bureau is one of three regulatory agencies that must approve the deal before it closes, in addition to the CRTC and Innovation, Science and Economic Development Canada. The hearing is expected to last four weeks with oral arguments scheduled for mid-December. Rogers hopes to close the Shaw deal by the end of the year, with a possible further extension to January 31, 2023.
