Competition Bureau seeks full block of Rogers’ proposed acquisition of Shaw

The Competition Bureau is seeking to block Rogers proposed $26 billion acquisition of Shaw in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.

The Bureau challenged the merger today by requesting an order from the Competition Tribunal to prevent it from proceeding. The Bureau is also requesting an injunction to stop the parties from closing the deal until its application can be heard. The Bureau must now prove its case before the Tribunal in order for the deal to be stopped.

The Bureau alleges that removing Shaw as a competitor threatens to undo the significant progress it has made introducing more competition into an already concentrated wireless services market, where Rogers, Bell and Telus (the Big 3) serve approximately 87% of Canadian subscribers.

Following an extensive investigation, the Bureau determined that competition between Rogers and Shaw has already declined. The Bureau’s position is that if the proposed merger is allowed to proceed, that harm will continue and may worsen. The applications filed seek to safeguard an effective, growing and disruptive regional competitor for the benefit of consumers.

The Bureau’s application to the Tribunal alleges that the merger would substantially prevent or lessen competition by:

• eliminating an established, independent and low-priced competitor;
• preventing future competition for wireless services, including 5G, within and outside Shaw’s existing service area; and
• preventing competition in wireless services for business customers in Ontario, Alberta and British Columbia.

The Bureau contends that Shaw, which provides wireless services to over 2 million customers in Ontario, Alberta and B.C., is Rogers’ closest competitor. It has consistently challenged the Big 3 by improving the quality of its network and attracting customers through its aggressive pricing, bigger data allowances and service innovations.

Since entering the wireless market in 2016, the Bureau’s investigation found that Shaw has driven down prices and made wireless data more accessible to consumers who pay some of the highest prices for wireless services in the developed world. As a result, Shaw’s wireless subscriber base has doubled and data prices have decreased where they had previously increased year-over-year.

The Bureau’s investigation found that prior to the merger announcement, Shaw planned to enter new wireless markets, launch its 5G network, and expand its wireless services to businesses. Since then, investment in its network has declined. In addition, Shaw’s reduced marketing and promotional activity has resulted in an overall loss of competition in the market.

A backgrounder with more information on the Bureau’s action is available on its website.

Public versions of the Bureau’s applications will be available on the website of the Competition Tribunal shortly.