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.
Posted at 11:00 a.m.
The new owners of Freedom Mobile would notably 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, will likely be less likely to compete with similar vigor than they would have done 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 had revealed in March last year an agreement valued at 26 billion (debt included) to acquire Shaw.
The Competition Bureau considers wireless an “essential service” and officially challenged the proposed merger on Monday, seeking an order from the Competition Tribunal to stop it from happening.
An injunction is also sought to prevent Rogers and Shaw from completing the transaction or selling their assets until the Competition Bureau’s request is heard.
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 Friday of the Competition Commissioner’s intention to challenge their proposed merger, the two companies said on Saturday that they are proposing a “complete” sale of the assets of Freedom Mobile, Shaw’s wireless subsidiary.
“Rogers and Shaw engage in process to sell Freedom Mobile to address concerns raised by Commissioner of Competition and ISED [Innovation, Sciences et Développement économique Canada] “Said the two companies on Saturday.
The Canadian Radio-television and Telecommunications Commission (CRTC) – the other regulatory body whose approval is needed for the merger to go ahead – gave its approval in March.
Sale of Freedom Mobile
Last month, the daily The Globe and Mail claimed that Rogers had submitted an agreement to the federal government surrounding the sale of Freedom to Xplornet in order to obtain approval from the authorities 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 noted 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 went ahead, this harm would continue and could worsen.