Request to intervene in Competition Bureau case to block Rogers’ $26 billion takeover of Shaw

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Quebecor Inc. has offered to back arch-rival Rogers Communications Inc. in its fight against the Competition Bureau over Rogers’ bid to become even bigger by buying Shaw Communications Inc.

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Videotron, the Montreal-based cable and wireless arm of Quebecor, has asked to intervene in the Competition Bureau’s case to block Rogers’ $26 billion deal to buy Shaw, according to a motion filed July 8. If approved, Quebecor will be permitted to challenge in favor of the agreement before the Federal Competition Tribunal.

Quebecor is probably self-interested. Last month, Rogers and Shaw agreed to sell Shaw’s Freedom Mobile assets to Quebecor for $2.85 billion in a bid to allay competition commissioner Matthew Boswell’s concerns about the anti-competitive effects of the takeover. control.

In his court submissions, Boswell warned that selling Freedom Mobile to the wrong company could stymie an otherwise viable fourth challenger to Canada’s Big Three telcos, an oligopoly that includes Rogers as well as BCE Inc.’s Bell Canada. and Telus Corp.

Boswell described Freedom as a welcome disruptor to Canada’s consolidated cell phone service market, arguing that the company’s aggressive approach to pricing and service innovation “has forced the Big 3 to compete for customer loyalty”.

The divestment enables Videotron to achieve its long-standing ambition to expand its operations outside of Quebec and operate as the fourth national wireless service provider in Canada

Jean-François Lescadres, Vice-President of Finance at Videotron

Quebecor CEO Pierre Karl Péladeau insists he’s ready to take on the role of fourth player; so much so that he is ready to plead his case before the Competition Tribunal.

Freedom would double Videotron’s subscriber base. In its court filings, Quebecor said it could present evidence of the company’s plans to use the acquisition of Freedom to create “aggressive competition” in the wireless market outside of the country. Quebec, which is the only place where the company currently does significant business.

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“The sale enables Videotron to fulfill its long-standing ambition to expand outside of Quebec and to be the fourth largest national wireless service provider in Canada,” wrote Jean-François Lescadres, Vice-President finances of Videotron, in an affidavit.

Lescadre said blocking the deal would destroy a “transformational transaction” both for Quebecor and for the Canadian wireless industry as a whole.

1. Rogers services down for thousands of customers across Canada

2. Rogers and the Competition Bureau fail to resolve their disputes over the merger

3. Loretta Rogers, director and matriarch of Rogers Communications Inc., dies at 83

Michael Osborne, a competition lawyer with Cassels Brock and Blackwell LLP, said it made sense for Quebecor to intervene in the case, since the legal battle now focuses on “arbitration of the solution” to the objections from the Competition Bureau. And the way to solve the problems, in this case, revolves around Quebecor.

“They talk about their ‘aggressive competition’ plans,” he said. “It’s the kind of thing that makes music to the ears of a competition authority.”

So far, the Competition Bureau’s position on Quebecor’s solution is unclear. Earlier this week, Rogers and Shaw announced they were unable to reach a resolution with the bureau during mediation talks on July 4-5, dashing any hopes of a quick end to the dispute. Quebecor representatives attended the meetings, according to the company’s July 8 motion to intervene in the case.

Robin Shaban, a former Competition Bureau officer, said Boswell appears concerned about the fate of Shaw’s mobile business if it can no longer offer packages with other Shaw services or rely on the network. retail from Shaw.

“How is Quebecor supposed to transplant itself to Alberta and operate as if it were Shaw? It’s quite a large order. And he doesn’t even have to be as good as Shaw. But it must be in the same universe,” said Shaban, senior economist at Vivic Research. “Is it possible? I don’t know.”

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