The FCA wants the full Rogers-Shaw contract

The antitrust regulator says it will only approve a full block of Rogers Communications Inc’s RCI-BT purchase of Shaw Communications Inc’s SJR-BT, even as a federal judge suggested the watchdog and telecom companies find common ground before the appeals hearing begins. November 7th

In a contentious virtual hearing on Tuesday, FCA lawyer Derek Leschinsky said that anything less than a full block merger “would not eliminate the substantial prevention and diminution of competition caused by this deal” and argued that the deal would have a significant impact. adverse effects on customers and the economy as a whole.

The Finnish Competition Authority and the telecommunications companies face the Competition Tribunal, which is chaired by the President of the Federal Court, Paul Crampton.

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During the case management conference, attended by nearly 300 lawyers and members of the public, accusations of obstinacy flew on both sides. It revealed the deep disagreements that remain between the telecommunications giants and the competition agency over the agreement and what issues the parties are arguing about in court.

The FCA has suggested that it intends to proceed with the case in March 2021 based only on the original agreement between Rogers and Shaw, and that the newer proposal to sell Freedom Mobile should not be considered as it was not part of its May 9 application.

Meanwhile, Rogers and Shaw insist that their proposed sale of Freedom to Quebecor QBR-BT should be considered as part of the proceedings. Kent Thomson, a Shaw representative, said the competition agency was considering an application for the deal, which no longer exists.

Chief Justice Crampton sided with the telcos and recommended that the competition agency’s lawyers focus on the deal at hand.

The duration of the negotiations is four weeks, and it can be extended for a fifth week. Chief Justice Crampton sent a letter to all parties Monday night encouraging them to work toward a solution to “streamline” the process.

Mr. Thomson called the competition agency “out of touch” as it continued to reject Shaw as it sells Freedom Mobile, Canada’s fourth-largest cellphone operator, to Quebecor Inc.-owned Videotron.

“There is no world where Rogers buys Freedom Mobile,” Thomson said. “Freedom is out of the hands of an independent company called Videotron until Rogers buys one share of Shaw.”

“What you’re seeing is a remarkably stubborn refusal by the commissioner to acknowledge reality,” he added.

Leschinsky said the antitrust agency believes that separating Freedom Mobile from Shaw’s cable network will weaken a competitor because Videotron will have to rely on rival Rogers to access the underlying wireline infrastructure needed to deliver cellular service.

“Competitive effects remain with Videotron to the extent that it is deprived of the wired interconnection used by Rogers in this transaction,” Leschinsky said. “This is an injury that requires a review of the entire deal.

“Wireless business is not an independent entity. It’s a dependent entity, Leschinsky said.

Rogers and Shaw declined The Globe’s request for comment.

In a statement, the Competition Bureau said “the Commissioner’s views on the inadequacy of the sale of Freedom to Videotron as a vehicle for Rogers’ purchase of Shaw are public”.

Shaw’s stock jumped 5 percent on Tuesday as the hearing progressed, closing at $35.65 on the Toronto Stock Exchange. Shaw shares are still trading well below Roger’s offer of $40.50 per share, reflecting investor concerns that the government will block the takeover.