OTTAWA –
A federal appeals court rejected the Competition Bureau’s effort to overturn a key approval for its takeover of Shaw Communications Inc. by Rogers Communications Inc.
Court of Appeal judge David Stratas said on Tuesday the bureau’s arguments did not meet the threshold of gross error that would be needed to overturn the Competition Tribunal’s decision to approve the $26 billion deal.
“It’s a high threshold. It is not enough to pull the leaves and branches and let the tree stand; rather, the whole tree must come down,” he said, delivering a ruling from the bench before the companies involved had given their oral arguments.
The competition tribunal, in its Dec. 30 approval, made clear that the transaction was unlikely to prevent or significantly lessen competition, supported by sufficient evidence, Stratas said.
“Even if the Competition Tribunal had erred on the narrow legal issues which the Commissioner now raises in this court, we are not persuaded that the result could have been different.” It would therefore be pointless to send this case back to the Competition Tribunal.’
The Competition Bureau’s arguments focused on what they said were four key legal errors, focusing particularly on how Shaw’s proposed sale of Freedom Mobile to Videotron was factored into the tribunal’s decision.
Bureau lawyer Alexander Gay argued the tribunal should have evaluated the deal as originally proposed before adding Shaw’s sale of Freedom Mobile to Quebecor-owned Videotron Ltd.
If the deal was seen as a means to address competition concerns rather than an integral part of the deal, it wouldn’t stand, Gay said.
“It’s almost entirely a series of service agreements between competitors. They couldn’t be accounted for,” Gay said.
“This is a huge mistake. And I think it casts enough doubt in this case that he really should be brought back for that very reason.”
Judge Strata said looking only at the merger, which could not proceed without the sale of Freedom Mobile, would be an “invasion of fiction and fantasy” and that the tribunal was not shackled to the earlier structure of the deal.
The deal, which Rogers hopes to close by January 31, still requires approval from Industry Minister Francois-Philippe Champagne.
Champagne said in a statement that it is reviewing the decision of the Federal Court of Appeal and will make a decision on the deal in due course.
“Promoting competition and affordability in the telecommunications sector was – and remains – my top priority,” he said.
Rogers Communications, Shaw Communications and Quebecor applauded Tuesday’s ruling.
“We welcome this clear, unequivocal and unanimous decision by the Federal Court of Appeal,” they said in a joint statement.
“We continue to work with Innovation, Science and Economic Development Canada to secure the final approval necessary to close the pro-competitive transactions and create a stronger fourth wireless carrier in Canada and a more formidable cable competitor.”
Advocacy group OpenMedia said in a statement that the deal as it stands means less choice and higher prices.
“The deal the Tribunal accepted is still terrible for ordinary Canadians,” said OpenMedia Director of Campaigns Matt Hatfield.
He urged Champagne to block the deal and instead set lower prices for ISPs to access Internet infrastructure.
The House of Commons Industry and Technology Committee, which previously recommended the deal, will meet on Wednesday to look at the deal again.
Matthew Boswell, the competition commissioner, said he was disappointed by the decision.
“While today’s development is discouraging, we stand by the findings of our investigation and the decision to challenge the merger,” he said Tuesday evening in a statement.
“We brought a strong and responsible case to the Tribunal after conducting a thorough examination of the facts.
Boswell said that while they continue to disagree with the Tribunal’s findings, they accept the decision and will not appeal further.
This report from The Canadian Press was first published on January 24, 2023.
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