Ottawa gives final approval, with conditions, for Rogers’ $26B purchase of Shaw

OTTAWA –

The largest telecommunications deal in Canadian historical past will go ahead after Rogers Communications Inc.’s $26-billion takeover of Shaw Communications Inc. obtained approval from Ottawa on Friday.

The inexperienced mild means the deal has cleared its closing regulatory hurdle simply over two years after it was first introduced.

But Industry Minister Francois-Philippe Champagne took a stern tone on Friday, vowing to “be like a hawk on behalf of Canadians” to make sure compliance with the circumstances he outlined, aimed toward bolstering competitors and decreasing telephone and web prices.

Champagne authorised the switch of Shaw-owned Freedom Mobile’s wi-fi licences to Quebecor Inc.’s Videotron, which operates in Quebec and a few border areas of Ontario. Rogers and Shaw agreed in June 2022 to promote Freedom Mobile to Videotron for $2.85 billion in an try and ease competitors issues raised by the unique proposal.

Rogers introduced its deal to purchase Shaw in March 2021 and the deadline to shut the deal has been pushed again quite a few instances. The three firms stated Friday they anticipated to finish the transaction by April 7.

Champagne stated Ottawa has secured 21 legally enforceable commitments from Rogers and Videotron to “actually drive down prices.”

“Make no mistake. We will be monitoring their performance under these terms and conditions and making sure that we enforce the terms of these contracts on behalf of Canadians,” he stated.

On Friday, the minister stated Ottawa’s circumstances “should not be taken lightly.” He stated they might guarantee a “fourth national player can go toe to toe with the Big Three and actually drive down prices.”

Along with Rogers, Bell Canada and Telus Corp. have the overwhelming majority of the market share within the Canadian telecommunications sector.

Those circumstances embody Rogers establishing a second headquarters in Calgary and including 3,000 new jobs based mostly in Western Canada “in the coming months” that it should preserve for no less than 10 years.

It should additionally spend $5.5 billion to develop 5G protection and extra community companies, in addition to an extra $1 billion to attach rural, distant and Indigenous communities.

“We are very pleased to move forward with this transformative merger and proudly deliver on our commitments to enhance and expand network coverage, connect underserved communities, and improve access for low-income Canadians,” stated Rogers president and CEO Tony Staffieri in a press launch accompanying the announcement.

“Building on a shared legacy with Shaw, we will invest substantially to bring more choice, more value, and more connectivity to Canadians across the country.”

Videotron should provide plans which can be no less than 20 per cent decrease than its rivals and spend $150 million over the subsequent two years to improve Freedom Mobile’s community. It is restricted from transferring any Freedom Mobile licences for a decade.

Champagne additionally introduced his division would launch a assessment of Canada’s spectrum switch framework, noting one has not been performed in almost a decade.

“I would not mess with the regulator,” he stated when requested how the circumstances can be enforced. “It’s never a good thing, not only if you have a contract with conditions, but on top of that, just think about the penalties.”

If Rogers breaches its circumstances, it should pay as much as $1 billion in damages, the minister stated. Videotron would doubtlessly be topic to $200 million in penalties if it fails to satisfy its commitments.

But some observers anxious the circumstances don’t go far sufficient. Keldon Bester, co-founder of the Canadian Anti-Monopoly Project, questioned whether or not the penalties have been sufficiently aggressive to make sure compliance.

“The reality is that the deal shouldn’t be proceeding in the first place and so at best, this is a consolation prize,” he stated.

“There’s a big incentive for both Rogers and Videotron to shirk the commitments. It creates the incentive for parties to do the math and say, ‘If we lose more money making these commitments, why bother fulfilling the commitments?”‘

In January, the Federal Court of Appeal rejected the Competition Bureau’s bid to quash the deal.

The regulator had argued that approving the merger would cut back competitors and lead to increased cellphone payments, poorer service and fewer choices for customers. It needed the courtroom to overturn a Competition Tribunal ruling in favour of the deal.

Instead, the courtroom sided with the tribunal’s view that “there was no substantial lessening of competition” in danger.

The firms had beforehand tried to resolve the deadlock with the Competition Bureau through mediation by means of final summer time and fall, however that course of was unsuccessful.

Telecommunications guide Mark Goldberg stated the phrases outlined by the federal authorities make sense, calling the penalties “meaningful.”

But he famous the businesses had already publicly dedicated to a lot of these circumstances all through the two-year course of.

“I think this deal could have been done a year ago if the Competition Bureau hadn’t been stubborn,” Goldberg stated.

The Canadian Radio-television and Telecommunications Commission authorised Rogers’ acquisition of Shaw’s broadcasting companies in March 2022, topic to sure circumstances.

That included a requirement for Rogers to contribute $27.2 million to numerous initiatives and funds, 5 instances what the corporate had initially proposed.

The CRTC, which was tasked with assessing broadcasting components of the transaction, stated 80 per cent of that sum should be directed to the Canada Media Fund, the Independent Local News Fund and licensed unbiased manufacturing funds.

Champagne informed reporters that the Liberal authorities has “changed the game” for telecommunications firms in Canada, however promised “this is not the end of it.”

“If we don’t see prices coming down … I’ll be seeking additional power to make sure that we drive down prices and at that time, everything is on the table,” he stated.

But OpenMedia, an advocacy group that promotes web affordability, stated Champagne’s approval put “the nail in the coffin of competition in telecommunications in Canada.” It urged full-scale competitors reform in Canada to keep away from extra mergers sooner or later.

“This is a dark day for the internet in Canada,” stated government director Laura Tribe.

“It’s hard to reconcile this week’s federal budget filled with promises of affordability measures, with such a direct assault on choice and affordability for internet connectivity. It’s a massive betrayal that’s only made worse coming from a government that has long-promised improved telecom affordability.”

— With information from Nojoud Al Mallees in Ottawa

CTV News is a division of Bell Media, which is a part of BCE Inc.

This report by The Canadian Press was first printed March 31, 2023.