THOSE WHO ARE CLOSELY following the approval process of the proposed merger of Rogers Communications and Shaw Communications will know the outside date for closing the transaction was extended from March 15, 2022, to June 13, 2022, and was extended again last month to July 31, 2022.
So, we are already looking in the rear-view mirror at one (soon to be two) outside closing dates.
What is going on? A lot.
Competition Tribunal
Last month, the Commissioner of Competition Matthew Boswell filed an application to the Competition Tribunal seeking to block the merger. He also filed an application seeking an injunction preventing the merger from going through until the tribunal ruled on the case.
On May 30, it was announced Rogers and Shaw made an agreement with the Competition Bureau, which means they will refrain from closing the transaction until after the tribunal has ruled on the bureau’s application. At the time, Rogers and Shaw issued a joint news release indicating they are both committed to addressing the commissioner’s concerns and hope to reach a settlement.
Highlighting their desire for a quick resolution to the matter, both Rogers and Shaw filed responses to the commissioner’s application to the tribunal last Friday – around two weeks before the 45-day deadline they had to make their submissions.
While again, the companies have indicated they hope to reach a settlement with the bureau meaning a hearing before the tribunal will not be necessary, Rogers and Shaw did agree to a request from the bureau to seek an expedited hearing process.
Rogers and Shaw are clearly motivated by the desire to move forward with the merger, which they previously anticipated would go through more quickly as indicated by the now extended outside date for closing.
The commissioner on his end, “sought an expedited process given the ongoing harm he has alleged is already occurring in the market,” a bureau spokesperson told Cartt.ca via email, adding “The expedited hearing schedule will be set by the Tribunal with input from the Commissioner and the parties.”
In the meantime, the Commissioner of Competition has until next Friday to respond to Rogers’ and Shaw’s submissions to the tribunal.
A tribunal representative told Cartt.ca the parties involved have been provided with a draft scheduling order and the tribunal is now “waiting to hear back from counsel on the proposed scheduling order.”
Presumably this means a schedule will be released sooner rather than later. Even still, if the matter goes before the tribunal, it is unlikely a ruling will be issued before July 31.
Selling Freedom
The sticking point on the merger right now is Shaw’s wireless assets.
The Competition Bureau has argued wireless competition between Rogers and Shaw has already been declining and will worsen if the merger is given the go-ahead. The commissioner’s application to the tribunal further “alleges that removing a strong regional competitor like Shaw will likely result in consumers paying significantly higher wireless prices.”
At this point, Rogers has already been engaged in a process of selling Shaw’s Freedom Mobile for several months as the Minister of Innovation, Science and Industry said back in March he would not allow Rogers to acquire all of Shaw’s wireless licences.
Rogers president and CEO Tony Staffieri has indicated there are multiple potential buyers for Freedom. This list reportedly includes Xplornet, the Aquilini family (which owns the Vancouver Canucks) and Quebecor.
The Competition Bureau, however, has made it clear not just any buyer for Freedom will do, with the Commissioner of Competition having argued separating Freedom Mobile from Shaw would leave the new owners to operate with reduced competitiveness.
In its response to the commissioner’s application to the tribunal, Shaw said Freedom was built and maintained to be easily separated from Shaw. “The Commissioner’s Application is premised on a misunderstanding and mischaracterization of the ability of Shaw’s wireless services business to “leverage” the company’s wireline assets,” Shaw argued.
This would seem to be good news for Anthony Lacavera, who founded and is currently the chair of Globalive – which owned Freedom back when it was Wind Mobile, before it was sold to Shaw. Lacavera has said he wants to buy Freedom back and run it as a pure-play independent wireless company (or, in other words, exactly what the bureau has indicated it does not want).
Globalive sees this as a viable proposal, bolstered by the announcement last month it had reached a spectrum and network sharing agreement with Telus, contingent on its acquisition of Freedom.
It is unclear if Globalive is even a contender at this point as Lacavera has previously said they have been left out of the official sale process, and it was recently reported the company was attempting to bypass Rogers by going directly to Shaw with its offer.
What is clear is Globalive has been persistent in its campaign to compel the government to use the sale of Freedom as an opportunity to address the competition-related issues it sees in Canada’s mobile industry and to position itself as a viable option.
Having already penned an open letter stating his case, Lacavera is now calling on Canadians to write to their MPs to demand action on the “decades-old mobile competition problem in Canada,” according to a Globalive email sent out today.
The CRTC approval
While the CRTC already approved the broadcast side of the Rogers/Shaw merger, two consumer advocacy organizations have petitioned cabinet to set aside the decision.
In addition to this, a recent report from the Standing Committee on Canadian Heritage on the impact of the merger on local news recommended the government reject the proposed merger. If the government does not do so, the report says the committee “believes that the CRTC should review the conditions of licence of Rogers and Shaw regarding their financial contributions to local expressions.”
Specifically, the committee recommended the government require, as a condition of licence, “a percentage of “local expression” financing collected through Rogers and Shaw license areas” be directed to a new Community Access Media Fund.
