TORONTO – The purchase of Mountain Cablevision by Shaw Communications can go ahead. Justice James Newbould of the Ontario Superior Court of Justice today dismissed the motion filed by Rogers Communications seeking to block the acquisition based on a near decade-old non-compete arrangement it had with Shaw.
The judge said Rogers had not established it could be caused irreparable harm by Shaw’s purchase, even though the judge recognized “that there is a serious question to be tried regarding the validity of the restrictive covenants,” wrote the judge in his decision.
His decision also said “(t)here is no doubt that the acquisition of Mountain by Shaw is contrary to the non-competition covenant of Shaw in the Swap Agreement.”
However, that swap arrangement, as we detailed here, is surely restraint of trade, said Justice Newbould. “Competition between Rogers and Shaw, Canada’s two largest cable operators, for the purchase of a cable television business, is more than restrained under the covenants. It is eliminated,” he wrote. “Mr. (Dermot) O’Carroll (Rogers Cable’s head of engineering) acknowledged in cross-examination that the purpose of the covenants was to enable each of Rogers and Shaw to expand their cable television businesses in their territory without competition for the purchase of new cable systems from the other, and to try to get them more cheaply.
“Shaw has a good case that the non-competition covenants are contrary to the public interest in relation to their effect on an owner of a cable television business who wants to sell his or her business in a competitive marketplace and a good case that these covenants are contrary to section 45(1)(d) of the Competition Act.”
The judge also said he did not buy Rogers arguments that it would suffer “irreparable harm” if the injunction wasn’t granted, calling one of Rogers claims of harm “speculative to the extreme.”
However, he did buy that if the injunction was granted, Mountain would suffer by having to wait out a court case as employees, unsure of their future, might choose to leave.
– Greg O’Brien
