Rogers Communications and Shaw Communications have agreed to begin a mediation process with Canada’s Competition Bureau to overcome the agency’s opposition to the two telcos’ proposed merger on anti-competition grounds. The Canadian Competition Tribunal told Reuters in a statement on Friday that the parties advised the tribunal that they wish to participate in the mediation set for 4-5 July, adding that all information related to mediation would be confidential.
TeleGeography notes that Rogers agreed to buy 100% of Shaw for around CAD26 billion (USD20 billion) including CAD6 billion debt in March 2021, and a year later talks began with prospective buyers for Shaw’s Freedom Mobile subsidiary to satisfy regulators’ antitrust concerns, but on 9 May 2022 the Competition Bureau declared its opposition to the merger on the grounds that competition would be lessened despite the divestment of the cellular division. On 17 June 2022 an agreement to sell Freedom to Quebecor was announced at an enterprise value of CAD2.85 billion, ostensibly creating a stronger mobile competitor by combining Freedom with Quebecor’s subsidiary Videotron, but the transaction terms meant that Rogers/Shaw would retain customers of Shaw’s second cellular brand, Shaw Mobile, which focuses on multi-service fixed/mobile bundling.
Reuters reported that the Competition Bureau was expected to seek the divestiture of the Shaw Mobile business, noting that in a filing last week the Bureau said that among other factors Shaw Mobile was currently a lead driver of growth for Shaw. The news agency added that mediation could pave the way for a settlement avoiding a protracted legal battle in the Competition Tribunal. If the parties fail to reach a solution via mediation, however, the matter will go to a trial not expected to start until November, with an outcome expected by year-end.