(OTTAWA) Rogers Communications tried to highlight Freedom Mobile’s competitiveness during its cross-examination of BCE’s chief information and technology officer as the hearing on its proposed takeover continued on Tuesday. from Shaw Communications for 26 billion.
Rogers went to great lengths to show that if Quebecor-owned Videotron purchased Shaw-owned Freedom, the resulting new entity would become a major player in the telecommunications industry, putting pressure on companies like Bell, especially since Bell does not offer a bundle of Internet and mobility services to consumers in British Columbia and Alberta.
The proposed deal between Videotron and Freedom would include multi-service packages in that region, according to a joint statement from Rogers, Shaw and Quebecor released earlier this year.
Rogers referred to Bell documents comparing service providers, which highlight Videotron’s significant penetration in the Quebec market.
Additionally, Rogers referred to a brief submitted by Bell to the Competition Bureau opposing the Rogers-Shaw merger in December 2021, in which Bell recognizes Freedom as a growing competitive threat.
The proposed sale of Freedom to Videotron is part of Rogers’ strategy to get its deal with Shaw across the finish line.
“Rogers and Shaw both want to convince the Competition Tribunal that Videotron will be an effective competitor, but in fact, it has not yet proven itself,” said Ben Klass, telecommunications industry observer.
“Rogers would not voluntarily offer Videotron as a suitor to Freedom if it feared disruptive competition. »
Shaw’s contribution to competition
On the first day of hearings last week, the Competition Bureau argued that Freedom’s proposed sale to Videotron would create a situation in which Videotron would likely be more “aligned” with Rogers and more vulnerable to anti-competitive actions by Rogers. The latter responded by saying that the regulator underestimated Videotron’s “abilities and skills” and minimized its success in Quebec.
Meanwhile, Professor Nathan Miller, who was called as a witness by the Competition Bureau on Tuesday, pointed out that the competition between Rogers and Shaw was significant because the latter had made significant progress in the market.
He believed that this was largely due to initiatives such as Freedom’s 2017 introduction of a data plan called “Big Gig” and the launch of Shaw Mobile in 2020, which increased competition by the costs.
In his analysis, which draws on data on carry and price changes and documents from industry participants, Miller found that when these initiatives were introduced, a significant number of subscribers left Rogers.
He added that the proposal to sell Freedom to Videotron did not change his view that the expanded merger would reduce competition, arguing that if Videotron were to succeed in delivering more aggressive competition in Western Canada than desired by Rogers, Bell or Telus, there could be anti-competitive retaliation in Videotron’s home market of Quebec, where it has the strongest presence and where it holds its wireline assets.
Rogers disputed Mr. Miller’s report during cross-examination, arguing that the analysis missed the mark and did not do enough to successfully quantify the alleged harm from Freedom’s sale to Videotron.
During cross-examination with BCE’s chief technology and information officer on Tuesday morning, Rogers also referred to the service disruptions Bell has experienced in recent years. Rogers experienced a massive network outage that affected millions of Canadians in July.
The hearing before the Competition Tribunal is expected to last four weeks, with oral arguments scheduled for mid-December, and aims to resolve the impasse between the Commissioner of Competition and Rogers and Shaw.
The Competition Bureau is one of three regulators that must approve the deal before it can go ahead, along with the CRTC and Innovation, Science and Economic Development Canada.
Rogers hopes to complete the deal with Shaw by the end of the year, with a possible further extension of the validity of its offer until January 31, 2023.