The proposed sale of Freedom Mobile will not eliminate the threat of a substantial lessening of competition if Rogers were to acquire Shaw, argues the competition commissioner in an application filed Tuesday with the Competition Tribunal to block the sale. transaction.
In particular, the new owners of Freedom Mobile would be “likely to provide less efficient financial resources, management, technical skills and other support”, it is specified.
Freedom Mobile’s divestiture of the rest of Shaw’s assets, including its cable network and outlets, would reduce that entity’s ability to offer bundled services to consumers in Alberta and British Columbia and its ability to compete, innovate and grow, says the Competition Bureau.
“After the transaction, wireless providers, including Rogers, are likely to be less likely to compete with similar vigor than they would have without the transaction,” the commissioner said. Shaw, with its regional base as an established wireline service provider in Western Canada with an integrated wireless unit, was an outstanding competitor with the ability and motivation to gain market share. He had an incentive to offer aggressive discounts on wireless. […] Rogers would not have this incentive given its relatively high market share and increased risk of lower prices for its existing subscriber base. »
Rogers revealed in March last year an agreement valued at 26 billion (including debt) to acquire Shaw.
The Competition Bureau considers wireless an “essential service” and formally challenged the proposed merger on Monday, seeking an order from the Competition Tribunal to prevent it from proceeding.
Rogers and Shaw indicated over the weekend that they remain committed to the transaction and intend to oppose the application filed by the Competition Bureau.
Informed on Friday of the competition commissioner’s intention to challenge their proposed merger, the two companies said on Saturday that they were proposing a “complete” sale of the assets of Freedom Mobile, Shaw’s wireless subsidiary.
“Rogers and Shaw are engaging in a process to sell Freedom Mobile to address concerns raised by the Commissioner of Competition and ISED [Innovation, Science and Economic Development Canada],” the two companies said Saturday.
The Canadian Radio-television and Telecommunications Commission (CRTC) — the other regulatory body whose approval is needed for the merger to go through — gave its approval in March.
Last month, The Globe and Mail reported that Rogers had presented a deal to the federal government to sell Freedom to Xplornet in an attempt to get government approval for its proposed merger with Shaw. The daily previously reported that Globalive had made an offer for Freedom before revealing last Friday that Quebecor had finally been asked to participate in the sale process surrounding Freedom.
The Competition Bureau had indicated on Monday that a merger of Shaw and Rogers would lead to higher prices, lower quality of service and a loss of choice, particularly in wireless services, and that is why the Bureau of competition opposes it.
The Bureau pointed out that eliminating Shaw as a competitor would jeopardize the “considerable” progress the company has made in increasing competition in an already concentrated market, according to the Competition Bureau.
The regulator added that competition between Rogers and Shaw had already diminished, according to the Bureau, and that if the proposed merger goes ahead, this harm would continue and could worsen.