Earlier this month, as the Competition Tribunal hearing of Rogers’s acquisition of Shaw came to a close, Chief Justice Paul Crampton made it clear the tribunal would “bend over backwards” to reach a decision as soon as possible, but said that the specialized court was “going to take the amount of time that it takes to produce a solid, robust decision well grounded in the evidence.”
With a decision in favour of the merging parties landing Thursday night, just over two weeks after Mr. Crampton’s commitment, it is worth considering how the most important takeover in recent memory was decided at lightspeed and to the benefit of three billionaire families.
When the tribunal last decided a merger case, the 2019 acquisition of a single grain elevator in Manitoba, it took more than 600 days to reach a decision. Now, when it made good on its commitment to the companies in the landmark telecom merger, value at $26-billion including debt, it rendered a decision in a fraction of that time.
This dramatic increase in speed is the result of two factors. First, last May the Competition Bureau had requested an expedited hearing, with the justification that the proposed transaction was already causing continuing harm to Canadians. But second, and more troubling, is the bullying of the lawyers representing the various billionaire families set to benefit from this deal at the expense of Canadians.
Not satisfied with an already compressed timeline, lawyers for the companies stressed that a decision would be needed before Christmas so Rogers could avoid making an additional payment to bondholders. In the final hours of the hearing, Competition Bureau counsel John Tyhurst urged the tribunal not to cut corners in reaching a decision to satisfy a deadline set by the companies themselves. Whatever the intentions of all sides in rushing to judgment, Canadians should be wary of the speed at which such consequential economic decisions are being made.
The Rogers-Shaw deal is easily the most important Canadian takeover in recent memory. Beyond its multibillion-dollar scale, it concerns a market critical to the future of Canada’s economy, one in which we already pay some of the highest prices in the world. It also takes place in the midst of a continuing review of Canada’s Competition Act, almost a year after the Competition Bureau sounded the alarm on deficiencies in the law, led by the very minister who holds the final approval on a key element of the transaction. Finally, it centres on a remedy proposed by Rogers, not our competition regulator, that involves the telecom giant propping up Vidéotron as a new national competitor with a raft of favourable contracts described as being on the “most generous of terms” by Rogers’s lawyers.
It is the substance of the remedy that will ultimately affect the daily lives of Canadians going forward. Is Rogers really in the business of nurturing disruptive competitors? Lawyers for Rogers argued that the Competition Bureau’s suggestion – that Vidéotron was being lured into a “trap” with these generous contracts – was absurd, and in some ways they were right.
Rather than a trap, Vidéotron is being welcomed into Canada’s cozy telecom oligopoly, supported by a web of agreements with a close competitor. It’s a solution that works for everyone with a net worth north of seven figures. The Shaw family gets to cash out the family business, the Rogers family gets a national wireline network, and the Péladeau family gets to expand its wireless footprint at a steep discount.
Because Canada’s permissive merger law has never fully blocked a transaction in its nearly 40-year history, it is not surprising that the decision was in favour of the merging parties. In the lead-up to the hearing, the bureau was criticized for its stubborn refusal to settle and avoid a hearing in front of the tribunal. But in being skeptical of solutions proposed by the parties standing to gain from the deal and opening the transaction to some level of public scrutiny, the bureau was doing its job to protect the interest of Canadians.
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