(OTTAWA) The sale of Freedom Mobile to Videotron, owned by Quebecor, would reduce competition in the telecommunications market, a consultant argued Thursday during a hearing before the Competition Tribunal on the proposed takeover of Shaw Communications by Rogers Communications for 26 billion.
According to Michael Davies, professor and founder of Endeavor Partners, the combination of Freedom and Videotron would be less competitive than Freedom is under the leadership of Shaw. Mr Davies believes the combined business will have a weaker product offering and there will be a loss of economies of scale.
It also predicts that the new Freedom would lose distribution benefits, including access to Shaw’s distribution channels and brand awareness.
Quebecor agreed to acquire Freedom in a $2.85 billion deal earlier this year.
Freedom’s competitive position was particularly strong before the announcement of the merger between Rogers and Shaw in March 2021, Davies recalled, since Shaw was then in a position to deploy 5G and license 3,500 spectrum. MHz.
The sale of Freedom Mobile to Videotron would see Quebecor get its hands on all Freedom-branded wireless and internet customers as well as all of Freedom’s infrastructure, spectrum and outlets in a move that would expand Quebecor’s wireless operations nationwide.
Freedom provides service in large parts of Ontario and Western Canada, while Videotron is active primarily in Quebec as well as bordering areas of Eastern Ontario.
The hearing before the Competition Tribunal should continue until mid-December and aims to resolve the impasse between the Commissioner of Competition, who wants to block the agreement, and Rogers and Shaw.
The Competition Bureau is one of three regulators that must approve the deal, along with the Canadian Radio-television and Telecommunications Commission (CRTC) and Innovation, Science and Economic Development Canada.
Rogers wants to complete the deal with Shaw by the end of the year, but would be willing to extend its offer once again until January 31, 2023.