The Competition Bureau (Bureau) has lost its challenge to the C$26-billion merger between Rogers Communications Inc. (Rogers) and Shaw Communications Inc. (Shaw), given the divestiture of the entirety of Freedom Mobile Inc. to Vidéotron Ltd. (Remedy).
The Competition Tribunal (Tribunal) found the Remedy will prevent material increases in prices and material decreases in service, quality, variety, and innovation.
Separate from the Tribunal's decision, the merger and Remedy still require approval from the Minister of Innovation, Science and Industry, François-Philippe Champagne (Minister). The Minister previously stated he would approve the transfer of the relevant spectrum licences from Shaw to Rogers and to Vidéotron, provided Vidéotron maintained ownership of the Freedom Mobile licences for at least 10 years and offered prices for wireless services in Ontario and Western Canada comparable to its current prices in Quebec, which are about 20 per cent lower than those in the rest of Canada. Previously, Vidéotron said that it would accept these conditions.
The adequacy of the Freedom Mobile divestiture to Vidéotron was the only serious issue in the proceedings before the Tribunal. The Tribunal found that Vidéotron, as an experienced market player in Quebec, will be able to operate Freedom Mobile as an effective competitor and offer competitive bundled products. The Tribunal determined Vidéotron's entry into the wireless markets in western Canada will ensure that competition and innovation there remain unchanged.
The decision illustrates the importance of presenting evidence that a divestiture buyer will be effective. The Tribunal noted, "Vidéotron is an experienced market disrupter that has achieved substantial success in Quebec. It has drawn upon that experience to develop very detailed and fully costed plans for its entry into and expansion within the relevant markets in Alberta and British Columbia, as well as in Ontario." This is also consistent with the Bureau's own guidelines.
The Bureau may appeal the Tribunal's decision to the Federal Court of Appeal under section 13(1) of the Competition Tribunal Act and may seek a suspension of the Tribunal's decision pending such an appeal. The head of the Competition Bureau stated that he is "very disappointed" in the Tribunal's decision and is "carefully considering" the Bureau's next steps, which could include an appeal.
The Tribunal will release the full reasons for its decision over the coming days.
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