Backgrounder: Competition Bureau seeks full block of Rogers’ proposed acquisition of Shaw


GATINEAU, QC – May 9, 2022

The Competition Bureau has filed an application with the Competition Tribunal seeking a court order to block Rogers’ proposed acquisition of Shaw and is also requesting an injunction to stop the parties from closing the proposed transaction until the matter can be heard by the Tribunal. The Bureau must prove its case at the Tribunal in order for the proposed transaction to be blocked.

The following provides information about the Bureau’s investigation and outlines key factors behind the Bureau’s decision to take action.

About the Bureau’s merger process

Under the Competition Act, mergers of all sizes and in all sectors of the economy are subject to potential investigation by the Commissioner of Competition. The goal of a merger investigation is to gather and evaluate evidence to determine whether a merger is likely to result in a substantial lessening or prevention of competition in any market in Canada.

If a Bureau investigation determines that this is the case the Bureau may take either (or both) of the following actions:

  • Negotiate a remedy with the merging parties, such as the sale of assets, to resolve the Bureau’s competition concerns.
  • Challenge the merger by requesting an order from the Competition Tribunal to prevent a merger from proceeding (or to dissolve or change a completed merger).

In all cases, the Bureau’s mandate is to protect competition and the public interest.

Why the Bureau is taking action in this matter

The Bureau conducted an extensive investigation of the proposed Rogers-Shaw merger which examined the following services offered by both companies:

  • wireless services, which refer to mobile communication services, such as voice, text and data;
  • wireline services, which refer to any wired telecommunications service, such as telephone, TV and internet; and
  • broadcasting services, which include business-to-business and consumer television broadcasting services.

The Bureau’s investigation concluded that the proposed merger would substantially prevent or lessen competition in wireless services.

The Bureau is challenging the merger to shield Canadians from higher prices, poorer service quality and fewer choices which are likely to occur as a result of the merger.

Vigorous competition is essential for Canadians to access affordable, high quality wireless services. Removing Shaw as a competitor threatens to undo the significant progress it has made introducing more competition into an already concentrated wireless services market. This action is intended to safeguard that progress, for the benefit of Canadians, by maintaining an effective, growing and disruptive regional competitor.

The proposed transaction

On March 13, 2021, Rogers agreed to purchase Shaw in a transaction valued at approximately $26 billion, including debt.

The parties

Rogers is a publicly traded Canadian communications and media company headquartered in Toronto, Ontario.

  • It is the largest wireless services provider in Canada, serving approx. 11.3 million subscribers across the country through its Rogers, Fido, Chatr and Cityfone brands.
  • It provides cable wireline services (e.g., Internet, TV and telephone) to consumers and businesses in Ontario, New Brunswick and Newfoundland.
  • It also offers media products to Canadians, such as sports media and entertainment, TV broadcasting and radio.

Shaw is a publicly traded Canadian communications company headquartered in Calgary, Alberta.

  • It is the fourth largest wireless services provider in Canada, serving approx. 2.1 million subscribers in Ontario, Alberta and British Columbia through its Freedom Mobile and Shaw Mobile brands.
  • It provides cable wireline services to consumers and businesses in western Canada and northern Ontario.
  • It also offers direct-to-home satellite television and video-on-demand services across Canada through Shaw Direct.  

In Ontario, Alberta and BC’s wireless markets, Rogers and Shaw are each other’s closest competitors.

The Commissioner’s application to the Competition Tribunal covers allegations in the following areas.

Shaw’s presence in the wireless services market benefits Canadians

Shaw entered the wireless market in 2016 after acquiring Wind Mobile (now Freedom Mobile). The Bureau’s investigation found that it has quickly become a competitive force in a market dominated by the Big 3 national carriers: Rogers, Bell and Telus.

Canadians pay some of the highest prices for wireless services in the developed world. The Bureau investigation found that Shaw has consistently put competitive pressure on the Big 3 through significant long-term investments to improve the quality of its network from 3G to a competitive LTE-Advanced and 5G-capable network.

In addition to network investments, the Bureau’s investigation found that Shaw has attracted customers through its aggressive pricing, bigger data allowances and service innovations.

  • Its market share has significantly increased and its subscriber base has doubled since first launching its Big Gig promotion in 2017.
  • Big Gig plans offered customers larger blocks of wireless data at reasonable prices and eliminated overage fees – a first in Canada.
  • It was also the first provider to offer devices for free on term contracts, and the first and only provider to offer $0 phone plans with internet bundles.

The Bureau’s position is that Shaw’s growth has been a direct benefit to Canadians. It has driven down prices and made wireless data more accessible to consumers.

Its disruptive tactics have forced the Big 3 to compete to retain customers. As a result, data prices have decreased where they previously were increasing year-over-year.

The proposed transaction has and will continue to harm competition

The Bureau’s investigation has concluded that competition between Rogers and Shaw has already been lessened – and the harm to competition will only worsen if the proposed transaction is allowed to proceed. For this reason, the Bureau has filed an application for an order to block the proposed transaction. The Bureau must now prove its case before the Tribunal in order for the deal to be stopped. In particular, the Bureau’s application alleges that the proposed transaction would substantially prevent or lessen competition in wireless services by:

  • eliminating an established, independent and low-priced competitor;
  • preventing future competition for wireless services, including 5G, within and outside Shaw’s existing service area;
  • preventing competition for wireless services to business customers in Ontario, Alberta and British Columbia; and
  • increasing the likelihood and ease of coordination between the Big 3 which will likely result in increased prices.

The Bureau’s investigation found that prior to the merger announcement, Shaw planned to enter new wireless markets, launch its 5G network, and expand its wireless services to business customers. Since then, its network investment has declined. In addition, the Bureau alleges that Shaw’s reduced marketing and promotional activity has resulted in an overall loss of competition in the market.

The Big 3 have roughly equal market shares Canada-wide and provide wireless services to approximately 87% of Canadian subscribers. The Bureau’s application to the Tribunal alleges that eliminating Shaw would significantly increase Rogers’ national market share – already the largest among the Big 3 - and would also significantly increase its market power.

The Bureau alleges that removing a strong regional competitor like Shaw will likely result in consumers paying significantly higher prices. Bell and Telus will not effectively limit Rogers’ increased market power because they do not have the same competitive incentives as Shaw.

In a 2019 study, the Bureau found that the Big 3 are able to charge higher prices where they possess market power, except in regions with wireless disruptors, where prices can be 35 to 40% lower. The Bureau alleges that the stable, high-priced environment seen prior to Shaw’s Big Gig promotion is likely to return if the merger proceeds.

What’s next?

Under the Tribunal’s rules, Rogers and Shaw have 45 days to file a response. Once the parties file a response with the Tribunal, the Bureau has 14 days to reply.

All other timelines are determined on a case-by-case basis, therefore, it’s impossible to predict how long a case may take to run its course.

The final decision in this matter rests with the Tribunal.

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