Canada’s regulators impose conditions on proposed Rogers-Shaw merger

As anticipated, François-Philippe Champagne, Canada’s Minister of Innovation, Science and Industry, has refused to greenlight a proposed €19bn merger between Rogers Communications and Shaw Communications. However, he did hold out the possibility that a revised agreement between the two telco giants might be possible.

François-Philippe Champagne

In a statement, he said: “Earlier this year, I stated that I would – under no circumstances – permit the wholesale transfer of wireless spectrum licences from Shaw to Rogers. Today, I officially denied that request, which had been pending before me. My decision formally closes that chapter of the original proposed transaction. As you’ve heard me say many times before, I will never waver in my commitment to promote competition and make wireless services more affordable for all Canadians.”

Rogers and Shaw are now entering a mediation process with Canada’s Competition Bureau – where they will present a proposal to make the merger more palatable.

Since the original merger request was tabled, Shaw has proposed selling its wireless division, Freedom Mobile, to Vidéotron – as a way of allaying regulator concerns about lack of competition. But Champagne has said this transaction can only happen subject to strict conditions. “First, I am giving notice that any new wireless licences acquired by Vidéotron would need to remain in its possession for at least 10 years. A new service provider needs to be in it for the long run. Second, I would expect to see prices for wireless services in Ontario and Western Canada comparable to what Vidéotron is offering in Quebec, which are on average 20% lower than in the rest of Canada.”

Responding to the Minister’s comments, Pierre Karl Péladeau, president and CEO of Videotron Quebecor, said: “We intend to accept the conditions stipulated by the Minister and incorporate them into the new version of the Rogers-Shaw/Quebecor-Freedom Mobile transaction, which has already been negotiated. They are in line with our business philosophy, which has proved highly successful in Quebec, where we have taken a significant market share in a very short span of time.”