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Shaw, Rogers, Quebecor say they welcome Federal Court of Appeal ruling

OTTAWA — The Federal Court of Appeal has dismissed the Competition Bureau's effort to overturn a key approval of Rogers Communications Inc.'s takeover of Shaw Communications Inc.
 The fate of Rogers Communications Inc. proposed takeover of Shaw Communications Inc. goes before the Federal Court of Appeal today as the Competition Bureau seeks to overturn the Competition Tribunal's approving the deal. Rogers and Shaw applications are pictured on a cellphone in Ottawa on Monday, May 9, 2022. THE CANADIAN PRESS/Sean Kilpatrick

OTTAWA — The Federal Court of Appeal has dismissed the Competition Bureau's effort to overturn a key approval of Rogers Communications Inc.'s takeover of Shaw Communications Inc.

Court of Appeal Justice David Stratas said Tuesday the bureau's arguments don't meet the threshold of an overriding error going to the core of the case that would be required to overturn the decision by the Competition Tribunal to approve the $26-billion deal.

"This is a high threshold. It is not enough to pull at leaves and branches and leave the tree standing; rather the entire tree must fall," he said, delivering a decision from the bench before the companies involved had given their oral arguments.

The Competition Tribunal, in its Dec. 30 approval, made it clear the transaction would not likely prevent or substantially lessen competition, supported by ample evidence, said Stratas.

"Even if the Competition Tribunal erred on the narrow legal points the commissioner now raises in this court, we are not persuaded that the result could have been different. Thus it would be pointless to send this case back to the Competition Tribunal."

The Competition Bureau's arguments had focused on what they said were four key legal errors that focused especially on how the proposed sale of Shaw's Freedom Mobile to Videotron factored into the tribunal's decision.

Bureau lawyer Alexander Gay argued that the tribunal should have assessed the deal as initially proposed, before the addition of the sale of Shaw's Freedom Mobile to Quebecor-owned Videotron Ltd.

Had the deal been assessed as a remedy to competition concerns, rather than an integral part of the deal, it wouldn't have stood up, said Gay.

“It’s almost entirely a series of service agreements between competitors. Those couldn’t have been considered," said Gay. 

"That is a huge error. And that I think gives enough doubt in this case that really it should be sent back for that very reason."

Justice Strata said that examining the merger alone, which couldn't go forward without the divestiture of Freedom Mobile, would be a "foray into fiction and fantasy," and that the tribunal is not shackled to the earlier structure of the transaction.

The deal, which Rogers hopes to close by Jan. 31, still requires approval from Industry Minister François-Philippe Champagne.

Champagne said in a statement that he was reviewing the Federal Court of Appeal's decision and will be making a decision on the deal in due course.

"Promoting competition and affordability in the telecom sector has been — and remains — my top priority," he said.

Rogers Communications, Shaw Communications and Quebecor applauded Tuesday's court ruling.

“We welcome this clear, unequivocal, and unanimous decision by the Federal Court of Appeal," they said in a joint release.

"We continue to work with Innovation, Science and Economic Development Canada to secure the final approval needed to close the pro-competitive transactions and create a stronger fourth wireless carrier in Canada and a more formidable wireline competitor.”

Advocacy group OpenMedia said in a statement that the deal as it stands means less choice and more expensive prices.

“The deal the Tribunal accepted is still terrible for ordinary Canadians," said OpenMedia campaigns director Matt Hatfield.

He urged Champagne to block the deal and instead set lower rates for internet service providers to access internet infrastructure.

The House of Commons industry and technology committee, which previously recommended against the deal, is set to meet Wednesday to look again at the transaction.

Matthew Boswell, Commissioner of Competition, said he was disappointed with the ruling.

“Although today’s developments are discouraging, we stand by the findings of our investigation and the decision to challenge the merger," he said Tuesday night in a release.

"We brought a strong, responsible case to the Tribunal after conducting a thorough examination of the facts."

Boswell said while they continue to disagree with the Tribunal’s findings, they accept the decision and will not pursue a further appeal.

This report by The Canadian Press was first published Jan. 24, 2023.

Companies in this story: (TSX:RCI.B; SJR.B)

The Canadian Press

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