A proposed merger between two major Canadian telecommunications firms cleared a key legal hurdle this week.
On Tuesday, a federal court in Ottawa tossed an antitrust complaint brought by Canada’s Commissioner of Competition that sought to block the C $20 billion (U.S. $14.9 billion) merger between Rogers Communications and Shaw Communications.
The merger, proposed two years ago, was expected to be completed in early 2022, but the combination was delayed due to legal and regulatory scrutiny, including the lawsuit.
The deal still needs to be approved by François-Phillipe Champagne, Canada’s interior minister, who said he intends to review the court’s order before making any decision.
If approved, the combined company would help secure Rogers as the largest telecommunications provider in Canada, a country where ordinary consumers fork over a significant sum of money for basic wireless phone service, pay television and home Internet.
To that end, Shaw has promised to divest its Freedom Mobile division — which also sells wireless phone service under the Shaw Mobile brand — to Quebec-based Vidéotron, though consumer advocates say it won’t be enough to promote competition in the country’s telecom industry.
“Even with a Freedom Mobile spinoff, Rogers buying Shaw means less choice and more expensive prices for every consumer in Canada,” Matt Hatfield, the campaigns director for advocacy group OpenMedia, said in a statement. “We’re seeing a collapse of independent ISPs that create positive price pressure on telecom giants, and we’re now on the verge of adding Shaw to that list.”
Hatfield said government officials could open up competition in Canada by enforcing requirements that wireless phone providers like Rogers, Telus and Bell share their network capacity and technology with independent start-ups. He also said the government should encourage mobile virtual network operators (MVNOs), which offer low-priced service that operate on the same wireless networks as bigger brands. (Dozens of MVNOs operate in the United States.)
“The right move is for Minister Champagne to block the Rogers-Shaw buyout in full; that’s the only way to protect the competition we have today,” Hatfield said. “But our telecom sector will only catch up to the fair prices the rest of the world pays through durable service-based competition that buyouts like this can’t eliminate.”
