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Competition Bureau launches court action to block Rogers-Shaw merger

11 May 2022

Canada’s Competition Bureau has filed court applications to prevent the proposed CAD26 billion (USD20 billion) merger of two of the country’s largest fixed and mobile telecoms companies, Rogers Communications and Shaw Communications, as it seeks to ‘protect Canadians from higher prices, poorer service quality and fewer choices’ particularly in mobile services. The Bureau has requested an order from the Competition Tribunal to prevent the merger from proceeding and has requested an injunction to stop the parties from closing the deal until its application can be heard. The Bureau must now prove its case before the Tribunal in order for the deal to be stopped.

The Bureau alleges that removing a strong regional competitor like Shaw – which is the fourth largest Canadian mobile operator via its Freedom Mobile division with 2.2 million subscriptions in British Columbia, Alberta and Ontario – will likely result in consumers paying significantly higher mobile prices in an already concentrated market where the ‘big three’ nationwide operators Rogers, Bell and Telus control over 87% of subscriptions between them. Rogers and Shaw have proposed to fully divest Freedom Mobile to address the anti-competitive concerns, having entered negotiations with several would-be buyers, but Commissioner of Competition Matthew Boswell argued in a filing to the Competition Tribunal that Freedom Mobile’s potential new owners were ‘likely to provide less effective financial, managerial, technical or other support for the wireless services business’ and that therefore ‘the proposed divestitures will not eliminate the substantial lessening or prevention of competition resulting from the proposed transaction.’ In a statement to Reuters, Shaw responded to the developments: ‘Shaw remains resolute in our commitment to completing this transaction, which will deliver significant long-term benefits to Canadians, competition, connectivity, and the economy,’ adding that a ‘negotiated settlement that involves the divestiture of our wireless business is the best and most logical outcome.’

Canada, Freedom Mobile (part of Shaw), Rogers Communications, Shaw Communications

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