Watchdogs, opposition back block on merger
Rogers-Shaw deal seen as bad for consumers
The Competition Bureau's move to block the telecom mega-merger between Rogers and Shaw was applauded by consumer advocates and political opposition parties on Monday.
“For consumers, it's a strong message that their affordability concerns do matter right now,” said John Lawford, executive director of the Public Interest Advocacy Centre.
The Competition Bureau said it would seek to block the deal “in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.”
The $26-billion merger raised concerns about wireless competition and affordability because it would see Rogers — one of Canada's Big Three wireless providers that hold 87 per cent of the Canadian wireless service market — buy Shaw.
Shaw's Freedom Mobile has been credited with driving down prices as the fourth competitor in Ontario, Alberta and British Columbia.
But the Competition Bureau said Monday that “removing Shaw as a competitor threatens to undo the significant progress it has made introducing more competition into an already concentrated wireless services market.”
The bureau said its investigation found that competition between Rogers and Shaw has already declined and “if the proposed merger is allowed to proceed, that harm will continue and may worsen.”
Lawford said the decision was unexpected, going by decisions the bureau has made in the past. “I suspect ... the government is falling off its chair in surprise, as am I,” he said.
Telecom researcher Ben Klass also said the move to block the deal “definitely wasn't expected.”
Advocacy group Open Media called for the Liberal government to join the Competition Bureau and “kill a deal that is good for no one but the Rogers family and Shaw family.”
The Rogers-Shaw deal must pass three different regulatory approval processes: from the CRTC, the Competition Bureau and Innovation Canada. The CRTC has already approved the deal, and now the bureau has said it will block it, but the decision by the Innovation Minister is still outstanding.
The Liberal government has previously said the companies would have to divest Freedom to another buyer.
NDP finance critic Daniel Blaikie noted his party has been opposed to the merger. “We're glad to see the Competition Bureau taking this seriously ... this is something that ought not to be going ahead.”
He said in an interview the Liberals should follow the Competition Bureau's lead. “They should also be opposing this merger, because we have not seen convincing evidence that it's going to lead to better prices or better service for Canadians or that it won't mean job losses in Shaw offices.”
Conservative innovation critic Gérard Deltell said Conservatives “appreciate the decision by the Competition Bureau to challenge the Rogers-Shaw merger on the grounds that it would result in less competition, fewer choices, and higher prices for Canadians.”
Alex Wellstead, director of communications for Innovation Minister François-Philippe Champagne said in an emailed statement the ministry will continue its process. He noted the Competition Bureau is an “independent law enforcement agency.”
“As it relates to requests to transfer licensed spectrum, ISED will continue to review any application on its merits and will render a decision in due course,” Wellstead said.
“As Minister Champagne has previously stated, our government is committed to promoting competition and ensuring affordability in the telecommunications sector.”
Klass said in his view, “the right thing to do is to block the merger outright.” He said “none of the obvious suitors really present a strong case
WE'RE GLAD TO SEE THE COMPETITION BUREAU TAKING THIS SERIOUSLY
to fill that role of a fourth carrier in Ontario, B.C., and Alberta on a sustainable basis.”
The Competition Bureau process is not public, meaning it's not clear what option Rogers and Shaw presented to the regulatory body.
One of the options is Xplornet, who became Manitoba's fourth player after the merger of Bell and MTS. The Globe and Mail reported last month that Rogers presented the government with a deal that would see Xplornet take over Freedom Mobile.
Klass said in an earlier interview Xplornet was “given a chance to try and compete in the mobile sector and they're not doing it there ... they're offering way less data for the money than the other companies.”
On Monday, the biggest plan advertised on Xplore Mobile's site was a 10 GB plan for $70. In comparison, in Manitoba the Big Three offered 25 GB plans for between $60 and $75, and Bell a 10 GB plan for $55.
Rogers has turned to Quebecor as a potential buyer in recent days in an effort to rescue the deal, according to media reports.
Consultant Gerry Wall said in an earlier interview Quebecor has a history of driving competition in Quebec, where it currently operates. “They have the lowest price on a lot of different plans in the Quebec market. So they not only know the business, know how to do it, but they're also demonstrably aggressive in terms of their pricing.”