Competition Bureau seeks full block of Rogers’ proposed acquisition of Shaw
Bureau files court applications to prevent the merger of two of Canada’s largest telecommunications companies
May 9, 2022 – GATINEAU, QC – Competition Bureau
The Competition Bureau is seeking to block Rogers proposed $26 billion acquisition of Shaw in an effort to protect Canadians from higher prices, poorer service quality and fewer choices, particularly in wireless services.
The Bureau challenged the merger today by requesting an order from the Competition Tribunal to prevent it from proceeding. The Bureau is also requesting an injunction to stop the parties from closing the deal until its application can be heard. The Bureau must now prove its case before the Tribunal in order for the deal to be stopped.
The Bureau alleges that removing Shaw as a competitor threatens to undo the significant progress it has made introducing more competition into an already concentrated wireless services market, where Rogers, Bell and Telus (the Big 3) serve approximately 87% of Canadian subscribers.
Following an extensive investigation, the Bureau determined that competition between Rogers and Shaw has already declined. The Bureau’s position is that if the proposed merger is allowed to proceed, that harm will continue and may worsen. The applications filed seek to safeguard an effective, growing and disruptive regional competitor for the benefit of consumers.
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, within and outside Shaw’s existing service area; and
- preventing competition in wireless services for business customers in Ontario, Alberta and British Columbia.
The Bureau contends that Shaw, which provides wireless services to over 2 million customers in Ontario, Alberta and B.C., is Rogers’ closest competitor. It 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.
Since entering the wireless market in 2016, the Bureau’s 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. As a result, Shaw’s wireless subscriber base has doubled and data prices have decreased where they had previously increased year-over-year.
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 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.
A backgrounder with more information on the Bureau’s action is available on its website.
Public versions of the Bureau’s applications will be available on the website of the Competition Tribunal shortly.
“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. 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. 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.”
Commissioner of Competition
The Bureau’s investigation of the proposed merger examined wireless, wireline and broadcasting services offered by both companies.
Rogers 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.
Shaw is the fourth largest wireless services provider in Canada, serving approx. 2.1 million subscribers in Ontario, Alberta and B.C.
Shaw entered the Canadian wireless market after purchasing Wind Mobile in 2016, later rebranding as Freedom Mobile. Shaw also offers wireless services to customers under its Shaw Mobile brand.
The Big 3 have roughly equal Canada-wide market shares and provide wireless services to approximately 87% of Canadian subscribers.
The Bureau’s investigation found that since acquiring Wind in 2016, Shaw has established itself as a strong, disruptive regional competitor. Data obtained during the investigation showed that Shaw’s number of wireless subscribers has increased by 101% compared to a 9% increase over the same period for the Big 3.
The data and information obtained during the investigation showed there is a high level of customer switching between Shaw and Rogers and they are often one another’s closest competitor.
The Bureau’s position is that Shaw’s growth and service innovations have directly benefitted consumers. It was the first Canadian provider to eliminate data overage fees, the first to offer devices for free on term contracts, and the first and only provider to offer $0 phone plans with internet bundles.
In a 2019 study, the Bureau determined 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’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 significantly increase its market power.
The Bureau alleges that removing a strong regional competitor like Shaw will likely result in consumers paying significantly higher wireless prices.
- Competition Bureau seeks information from market participants to advance investigation of Rogers’ proposed acquisition of Shaw
- Competition Bureau obtains court orders to advance investigation of Rogers’ proposed acquisition of Shaw
- Competition Bureau to review the proposed acquisition of Shaw by Rogers
- Comments of the Competition Bureau on Telecom Notice of Consultation CRTC 2019-57
- Merger Review Process Guidelines
- Merger Review Process and Feedback Form
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The Competition Bureau is an independent law enforcement agency that protects and promotes competition for the benefit of Canadian consumers and businesses. Competition drives lower prices and innovation while fueling economic growth.
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