Lawyers for Shaw, Rogers argue appeal of 'pro-competitive' merger should be rejected in court filings

·3 min read
FILE PHOTO: The headquarters of Rogers Communications Inc. is seen in Toronto
FILE PHOTO: The headquarters of Rogers Communications Inc. is seen in Toronto

Lawyers for Rogers Communications Inc. and Shaw Communications Inc. are asking a federal court to dismiss the Commissioner of Competition’s appeal of a tribunal decision to approve their $26-billion merger, arguing that the Commissioner’s claims of legal errors are flawed and the merger is “pro-competitive.”

In a 35-page filing to the Federal Court of Appeal, Rogers also said that even in the “unlikely” event the Commissioner could persuade the court that the tribunal made legal errors in its decision, there would still be “no basis” to refer the matter back to court, as it would not meet the test of a “substantial wrong or miscarriage of justice.

Similarly, Shaw said blocking the entire deal, which it described as “once-in-a-generation transaction,” >would “undermine rather than enhance competition,” given what it said is intense opposition from rival Telus Corp.

“In these circumstances, there is nothing to be gained — and much to be lost — from remitting the matter and further delaying the completion of this demonstrably pro-competitive transaction,” Shaw’s lawyers said in a memorandum of fact and law filed to the appeals court on Jan. 17.

After weeks-long hearings, the Competition Tribunal on Dec. 29 dismissed the Commissioner’s attempt to block the deal, which he followed by filing an injunction and appeal. The court of appeal granted an emergency interim stay on the tribunal’s approval of the merger, blocking the deal from closing until the appeal is heard.

“Respectfully, this pro-competitive transaction has been delayed long enough and must be allowed to proceed,” Rogers’ legal counsel wrote.

Rogers and Shaw have extended the outside date for the merger’s closing to Jan. 31 from Dec. 31. The telecom giants had originally expected to close the transaction in the second quarter of 2022.

Lawyers for Rogers stressed during the tribunal hearings that if a decision wasn’t reached before Dec. 31, the company would have to pay out an additional $250 million to bondholders.

The Competition Bureau, in its memorandum of fact and law filed Jan. 13, alleged the tribunal “made four legal errors” in its decision, and that a different outcome would have been reached if those “legal errors” were not made. But lawyers for the two telecommunications companies rejected that suggestion.

“His claims of profound legal error and calamitous policy implications are unhelpful rhetoric,” Rogers lawyers said.

The bureau’s lawyers are focusing their appeal argument around the divestiture agreement — in which Quebecor Inc. subsidiary Vidéotron Ltd. would purchase Shaw’s Freedom Mobile for $2.85 billion — as a proposed remedy to the transaction, which they said was only filed three months after the application to block the merger.

Throughout the proceedings, Rogers and Shaw argued that the divestiture of Freedom Mobile should allay concerns about reduced competition stemming from the merger. The telcos have pushed Vidéotron, a major player in Quebec but with little presence elsewhere, as a “stronger” fourth competitor in Canada’s wireless market than Shaw.

In their decision, the three-member tribunal rejected arguments that combining the two telecom giants would substantially lessen wireless competition, particularly after the companies struck a side deal to sell Freedom to Vidéotron.

The transaction was already given the green light by Shaw shareholders and the Court of King’s Bench of Alberta in 2021, while the Canadian Radio-television and Telecommunications Commission approved the transfer of Shaw’s broadcasting licences to Rogers in March last year.

The tribunal decision — subject to the appeal — left only approval from Innovation, Science and Economic Development Canada (ISED), led by industry minister François-Philippe Champagne, in the way of one of the biggest corporate combinations in Canadian history.

The court is scheduled to hold the appeals hearing on Jan. 24, which will be open to the public virtually at 9:30 a.m. There is no time frame as to when a decision on the appeal will be made.

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