Bureau alleges deal will lead to higher prices, poorer service quality and fewer choices, particularly in wireless services
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The Competition Bureau says it is seeking to block Rogers Communications Inc.’s’ proposed $26-billion acquisition of Shaw Communications Inc. in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.
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“The Bureau is … requesting an injunction to stop the parties from closing the deal” until its application to the Competition Tribunal “can be heard,” the Competition Bureau said in a statement Monday, noting that it must prove its case before the tribunal in order for the deal to be stopped.
“The Competition Bureau conducted a rigorous investigation of the proposed Rogers-Shaw merger and concluded that it would substantially prevent or lessen competition in wireless services,” Matthew Boswell, the commissioner of competition, said in a statement.
The Bureau is alleging that removing Shaw as a competitor threatens to undo “significant progress” made by introducing more competition into an already concentrated wireless services market where Rogers, Bell and Telus serve about 87 per cent of Canadian subscribers.
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“Eliminating Shaw would remove a strong, independent competitor in Canada’s wireless market — one that has driven down prices, made data more accessible, and offered innovative services to its customers,” Boswell said.
“We are taking action to block this merger to preserve competition and choice for an essential service that Canadians expect to be affordable and high quality.”
Shaw fell as much as 13 per cent and was down 6.8 per cent to $35.03 as of 2:15 p.m in Toronto. Rogers was down 2.8 per cent.
The federal competition authority said its “extensive investigation” into the proposed merger has determined that competition between Rogers and Shaw has already declined.
What’s more, the Bureau’s position is that if the proposed merger is allowed to proceed, harm will “continue and may worsen.”
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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, both within and outside Shaw’s existing service area, and preventing competition in wireless services for business customers in Ontario, Alberta and British Columbia.
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“The Bureau contends that Shaw, which provides wireless services to over two million customers in Ontario, Alberta and B.C., is Rogers’ closest competitor,” Monday’s statement said, adding that Shaw 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.”
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The 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, since entering the wireless market in 2016.
This has allowed Shaw to double its wireless subscriber base, and data prices have decreased where they had previously increased year-over-year.
The Bureau added that prior to the merger announcement, Shaw had planned to enter new wireless markets, launch a 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,” the statement said.
With additional reporting from Bloomberg
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