Proposed remedy in Rogers-shaw deal ‘not effective’

A remedy proposed by Rogers Communications Inc. to alleviate concerns about reduced wireless competition resulting from its planned $26-billion takeover of telecom rival Shaw Communications Inc. will not be effective, the Competition Bureau said in a filing made public Tuesday with redactions.

“Rogers and Shaw have (redacted) with parties interested in acquiring Shaw’s Freedom Mobile wireless business and have claimed that such divestiture would eliminate any substantial lessening or prevention of competition resulting from the proposed transaction,” said the filing with the Competition Tribunal. “However, the divestiture proposed is not an effective remedy for the competitive harm the Proposed Transaction has caused and will likely continue to cause.”

The Competition Bureau said Monday it is seeking a “full block” of the combination of Shaw and Rogers due to concerns about reduced competition and higher prices for consumers, particularly in wireless communications. Both sides must now argue their cases before the tribunal, a process that can take months, unless a suitable arrangement that satisfies the Competition Bureau can be reached.

After the Commissioner of Competition informed Rogers and Shaw last Friday that it planned to file an application opposing their merger, Rogers publicly pledged to sell Shaw’s entire wireless operation and assets, which operate under the banner Freedom Mobile.

Details about the remedy proposed privately in March to alleviate wireless competition concerns, as well as the names of parties that were part of that remedy, were blacked out in the documents that were made available to the public. However, National Bank telecom analyst Adam Shine said in a report Sunday that there were 12 bidders for Freedom Mobile’s assets, which were boiled down to two put forward by Rogers for government approval: New Brunswick-based rural Internet service provider and mobile network operator Xplornet Communications Inc., and Aquilini Investment Group.

Xplornet is owned by private equity firm Stonepeak Infrastructure Partners, and the Aquilini family owns the Vancouver Canucks among its varied holdings.

Rogers has not commented on reports of the bidders and terms of any such arrangements have not been made public.

Analysts have suggested that it may not be the buyers that are an issue, but rather the terms of the arrangements. Several have speculated that the Competition Bureau may want Rogers to continue to provide network or other backbone services to the new owners of the Freedom Mobile assets to help them compete in a market where just three companies — Rogers, BCE Inc.’s Bell Canada and Telus Corp. — serve about 87 per cent of Canadian subscribers.