Rogers and Shaw are firing back at the Competition Bureau, arguing their $26-billion merger deal will be good for Canadian consumers and the economy.
The companies filed new materials Friday in response to the bureau’s court application to block the deal. Both asked the Competition Tribunal to dismiss the bureau’s case.
The bureau has said the loss of Shaw’s wireless business — including Freedom Mobile, which operates in Ontario, British Columbia and Alberta — would lead to a substantial reduction in competition in the cellular market, which is dominated by Rogers, Bell and Telus.
The bureau said in court materials in early May that Rogers proposed selling off some of Shaw’s wireless assets, but the proposals didn’t go far enough to protect competition.
In its filing Friday, Rogers said the bureau was wrong in its claims about competition and failed to account for the “significant efficiencies the transaction will bring to the Canadian economy.”
Rogers said it would save money by combining with Shaw, be able to improve its networks and compete harder for customers.
The company also said it is still planning to sell off Freedom Mobile and argued the rest of the transaction, which is primarily about Shaw’s cable assets in Western Canada, poses no problems for competition and should not be blocked.
“Although Rogers and Shaw dispute there is any substantial lessening or prevention of competition in wireless services, or that any competitive effects are not outweighed by the efficiencies the transaction will generate, they have proposed the full divestiture of Freedom Mobile,” Rogers said.
Rogers said Freedom Mobile would be able to continue as a stand-alone wireless company even without access to Shaw’s other telecom network assets. After all, it said, Freedom was an independent carrier before Shaw acquired it in 2016.
Shaw made similar arguments in a separate filing. The company also said that it decided it had to sell because of the significant investments it would have to make to remain competitive in the future.
It said the deal with Rogers would be good for Canadian consumers because the combined company would be able to spend more on better networks.
Shaw said it makes the “overwhelming majority” of its revenue and earnings from its cable business and the bureau is wrong to block the entire deal based solely on concerns about the wireless market.
Meanwhile, one of the suitors vying to acquire Freedom Mobile says he took his offer straight to Shaw after hearing crickets from Rogers.
Anthony Lacavera, the founder and one-time CEO of Wind Mobile (which was later sold to Shaw and renamed Freedom Mobile), told the Star he sent an email directly to Shaw CEO Brad Shaw about a month ago.
Lacavera, whose investment firm Globalive Capital has offered to buy Freedom for $3.75 billion, believes Rogers is not seriously entertaining his proposal because the company sees him as too big of a threat.
“Rogers has continued to decline to engage with Globalive because we are an actual true independent competitor,” he said on Friday, adding that Rogers has instead proposed other buyers that won’t truly threaten his own cellular business.
“Rogers continues to put forward Shaw acquisition remedy solutions that are good for Rogers and bad for Canadians.”
Under the terms of its agreement with Rogers, Shaw cannot consider other proposals to buy its business, but Lacavera said he wanted to get the offer on Brad Shaw’s radar.
“I said, ‘We’ll follow up after June 13,’” which was the deadline for the deal to close at the time. When Rogers and Shaw extended that date to July 31, Lacavera sent the Shaw CEO another email to say the offer still stood.
The Globe and Mail previously reported that Globalive took its offer directly to Shaw and received no response.
Rogers declined to comment on Lacavera’s remarks Friday afternoon while a representative for Shaw was not immediately available.
The Competition Bureau went to court over the deal on May 9. It filed two applications, one to block the deal as a whole and a second one seeking a temporary order to stop the parties from closing the deal while the larger case is heard.
Earlier this week, the companies agreed to an injunction that prevented them from closing the deal unless they reached a settlement with the bureau or until the Competition Tribunal heard the court case.
They also agreed to an expedited hearing process for the larger court case and are still working out a schedule for that.
Earlier this year, the Canadian Radio-television and Telecommunications Commission approved Rogers’ acquisition of Shaw’s broadcasting services, including 16 cable services based in Western Canada and a national satellite service.
The deal also requires the approval of the federal department of Innovation, Science and Economic Development.
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