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Shaw takeover by Rogers draws closer after appeal dismissed


The Federal Court of Appeal has dismissed the Competition Bureau’s attempt to overturn a key approval of Rogers Communications Inc.’s takeover of Shaw Communications Inc.

Court of Appeals Judge David Stratas said on Tuesday that the bureau’s arguments do not meet the threshold of an overriding error going to the heart of the case that would be necessary to overturn the Competition Tribunal’s decision. to approve the $26 billion deal.

“This is a high threshold. It is not enough to pull the leaves and branches and leave the tree standing; rather, the whole tree must fall,” he said. , issuing a ruling from the bench before the companies involved have given their oral arguments.

The Competition Tribunal, in its Dec. 30 approval, made it clear that the transaction was unlikely to prevent or lessen competition substantially, supported by ample evidence, Stratas said.

“Even if the Competition Tribunal was wrong on the narrow points of law that the Commissioner is now raising in this court, we are not convinced that the result could have been different. It would therefore be pointless to refer this case to the Competition Tribunal.

The Competition Bureau’s arguments focused on what they characterized as four key legal errors that focused in particular on how Shaw’s proposed sale of Freedom Mobile to Videotron factored into the decision of the court.

Bureau lawyer Alexander Gay argued that the court should have assessed the deal as originally proposed, before the sale of Shaw’s Freedom Mobile to Quebecor-owned Videotron Ltd was added.

If the deal had been assessed as a remedy for competition concerns, rather than an integral part of the deal, it wouldn’t have held up, Gay said.

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

“It’s a huge mistake. And I think it gives enough doubt in this case to have him fired for that very reason.”

Judge Strata said the merger review alone, which could not proceed without Freedom Mobile’s divestiture, would be a “trip into fiction and fantasy,” and that the court is not chained to the previous structure of the transaction.

The deal, which Rogers hopes to complete by Jan. 31, still requires the approval of Industry Minister Francois-Philippe Champagne.

Champagne said in a statement that he is reviewing the Federal Court of Appeals decision and will make a decision on the deal in due course.

“Promoting competition and affordability in the telecommunications sector has been – and remains – my top priority,” he said.

Rogers Communications, Shaw Communications and Quebecor applauded Tuesday’s court decision.

“We welcome this clear, unequivocal and unanimous decision by the Federal Court of Appeals,” they said in a joint statement.

“We continue to work with Innovation, Science and Economic Development Canada to obtain the final approval necessary to complete the pro-competitive transactions and create Canada’s fourth strongest wireless provider and tougher wireline competitor.

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

“The deal the Court accepted is still terrible for everyday Canadians,” said Matt Hatfield, director of campaigns for OpenMedia.

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 spoke out against the deal, is due to meet on Wednesday to reconsider the deal.

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

“While today’s developments are discouraging, we stand by the findings of our investigation and the decision to challenge the merger,” he said in a statement late Tuesday.

“We have brought a strong and responsible case to the Tribunal after conducting a thorough review of the facts.”

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

This report from The Canadian Press was first published on January 24, 2023.

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