On December 30, 2022, the Competition Tribunal (the Tribunal) released its decision regarding the CA$26 billion merger between Rogers Communications Inc. (Rogers) and Shaw Communications Inc. (Shaw). The Tribunal found that Shaw’s agreement to sell its subsidiary Freedom Mobile Inc. (Freedom Mobile) to Québec-based Vidéotron Ltd. (Vidéotron) prior to closing of the sale to Rogers ensured competition would not be substantially lessened, and dismissed the Competition Bureau’s (the Bureau) application.

The core question addressed by the Tribunal was whether Rogers’ acquisition of Shaw, assuming a sale  of Freedom Mobile to Vidéotron, would be likely to prevent or lessen competition substantially in the provision of wireless telecommunications services in Alberta and British Columbia through materially higher prices or harm to non-price aspects of competition, such as lower service, quality, variety or innovation. The Tribunal found that the proposed transaction would not likely result in such effects, and therefore would not be likely to result in a substantial lessening or prevention of competition.

The Tribunal rejected the Bureau’s arguments that (i) Shaw’s divestiture of Freedom Mobile to Vidéotron would result in Freedom Mobile being a less effective competitor than it was immediately prior to the announcement of the transaction; (ii) Rogers’ acquisition of Shaw would give rise to anti-competitive unilateral effects; and (iii) the transaction would likely facilitate the exercise of collective market power by Rogers, Bell and Telus.

The Tribunal found that Vidéotron, as an experienced telecommunications player in Québec, would be able to operate Freedom Mobile as an effective competitor and offer competitive bundled products. It noted that, “Vidéotron is an experienced market disrupter that has achieved substantial success in Quebec. It has drawn upon that experience to develop very detailed and fully costed plans for its entry into and expansion within the relevant markets in Alberta and British Columbia, as well as in Ontario.”¹ Finally, the Tribunal noted that there would continue to be four strong wireless competitors in Alberta and British Columbia, namely, Bell, Telus, Rogers and Vidéotron, just as there is today (with Shaw/Freedom Mobile in lieu of Vidéotron).

The Tribunal also noted that Rogers’ post-merger market share in Alberta would be below the 35% “safe harbour” threshold set forth in the Competition Bureau’s Merger Enforcement Guidelines (MEGs), while its share in British Columbia would only slightly exceed the threshold. The Tribunal anticipated that those shares, as well as the shares of Telus and Bell, would erode as a result of Vidéotron’s entry.

The Bureau quickly appealed the Tribunal’s decision to the Federal Court of Appeal and obtained an emergency stay temporarily suspending the Tribunal’s decision. The appeal is currently scheduled to be heard by the Federal Court of Appeal on January 24, 2023. The Bureau’s notice of appeal, noting the decision was made “in an unprecedented” fifteen days, argues that the Tribunal made certain errors made primarily relating to its analytical approach.

The transaction (because it involves the transfer of wireless spectrum licences) also requires approval from the Minister of Innovation, Science and Industry. The Minister said that he will wait until there is "clarity" in the ongoing legal process under the Competition Act before issuing a decision.

The Tribunal’s decision is notable in a number of respects, including:

• The Tribunal’s consideration of the regulatory environment. The Tribunal considered the regulatory environment, including the Minister’s statement that “any new wireless licences acquired by Vidéotron would need to remain in its possession for at least 10 years”² and that he “would expect to see prices for wireless services in Ontario and Western Canada comparable to what Vidéotron is currently offering in Quebec, which are today on average 20 per cent lower than in the rest of Canada.”³
• The Tribunal considered the “proposed merger” under its review to be the amended version, which included the sale of Freedom Mobile to Vidéotron and not the initially proposed merger, which did not include the sale to Vidéotron. The Bureau argued the Tribunal should first assess the competitive effects of Roger’s acquisition of Shaw (in the absence of the Freedom Mobile sale to Vidéotron) and then consider whether the merging parties could meet the burden of satisfying the Tribunal that a divestiture of Freedom to Vidéotron would be a sufficient remedy to offset the substantial lessening of competition. This was a technical issue that concerned Tribunal process and whether the Bureau or the parties bore the burden of proof. The Tribunal did not accept the Bureau’s position and commented that to “spend scarce public resources assessing something that will never happen is divorced from reality.”⁴ The Tribunal further found that even if it were to accept the Bureau’s argument about the parties (instead of the Bureau) bearing the burden of proof, Rogers and Shaw would have met the burden.
• The Tribunal did not consider the efficiencies defence in its decision. The merging parties had also relied on the efficiencies defence, but the Tribunal declined to address efficiencies in light of its finding that the transaction was unlikely to prevent or lessen competition substantially. While the efficiencies defence has been a hot topic of discussion recently (including as a result of ISED’s recently launched “Consultation on the future of competition policy in Canada”)⁵ because it can operate to save an otherwise anti-competitive merger, the Tribunal found it unnecessary to address efficiencies given it did not find the transaction would be likely to substantially lessen or prevent competition. The Tribunal’s decision in this regard is consistent with the principle that courts may decline to answer hypothetical or abstract questions that are not “live issues.”⁶
• The Tribunal reaffirmed and endorsed the safe harbour thresholds. The Tribunal considered Rogers’ post-merger market share in Alberta and British Columbia to be acceptable under the safe harbour thresholds set out in the MEGs.⁷ In so doing, the Tribunal endorsed certain paragraphs of the MEGs that address the utility of the safe harbour thresholds in substantive merger review.
• The Tribunal expedited its decision, demonstrating sensitivity to commercial realities. The Tribunal's expedited deliberation time confirms that it can make timely decisions regarding complex mergers taking into account commercial time pressures.

Finally, even though the Tribunal’s decision attracted significant media attention and was anxiously awaited, the substantive analysis is highly fact-specific and based on evidentiary findings.

For more information on this topic, please reach out to the authors Adam S. Goodman, Simon Kupi, Monica Song, Sandy Walker, Barry Zalmanowitz, KC  and Camila Maldi.

1. Canada (Commissioner of Competition) v Rogers Communications Inc and Shaw Communications Inc, 2023 Comp Trib 1 (“Rogers”) at para 351. ↩
2. Rogers at para 27. ↩
3. Ibid. ↩
4. Rogers at para 110. ↩
5. See Dentons - Innovation, Science and Economic Development Canada Launches Consultation on the Future of the Competition Act ↩
6. See Borowski v. Canada (Attorney General), [1989] 1 S.C.R. 342. ↩
7. The MEGs indicate that the Bureau will generally not challenge a merger on the basis of unilateral effects where the post-closing share of the merged firm would be less than 35%; and will generally not challenge a merger on the basis of coordinated effects where the four largest firms in the market post-closing have less than a 65% share or the merged firm’s share would be less than 10%. Competition Bureau, Merger Enforcement Guidelines (Competition Bureau: Ottawa, March 2, 2009), para. 5.9. ↩