Federal Court of Appeal to hear Rogers-Shaw appeal on Jan. 24


The legal wrangling continues but experts say the odds of the $26-billion Rogers-Shaw deal closing have gone up substantially after a tribunal ruling delivered a “smackdown” to the Competition Bureau’s case against the telecom merger.

“I think we’ll see it wrapped up if not in the first quarter (of 2023), then in the second,” said Michael Osborne, chair of the competition law practice at Cozen O’Connor in Toronto. “We’re in the final few innings.”

The Competition Tribunal last week ruled in favour of the companies, finding the merger, along with a side deal for Québecor’s Vidéotron to acquire Shaw’s wireless business Freedom Mobile, should not be blocked.

It said the transactions would not seriously reduce competition or lead to materially higher prices in the wireless business. In fact, the tribunal said, Vidéotron is likely to be a “more aggressive and effective competitor” than Freedom Mobile and Shaw would have been if the merger had never happened.

“Rogers and Shaw have had a truly resounding victory. I have never seen a smackdown as thorough as this of a Commissioner’s case,” said Osborne, referring to Matthew Boswell, the Commissioner of Competition, who leads the Competition Bureau and brought the case against the merger.

Critics have said the decision appeared rushed while consumer advocates say they are concerned about Rogers, one of Canada’s three largest telecoms, getting even bigger. Boswell himself said he was “very disappointed” and the bureau appealed the tribunal’s ruling.

During a case conference on Tuesday, Justice David Stratas said the Federal Court of Appeal will hear the matter on Jan. 24.

That was a win for the companies, which had pushed for an early hearing of the appeal and are still hoping to close the transactions by Jan. 31. The companies have agreed not to close before the appeal process concludes.

The Vidéotron deal still requires a separate approval from Innovation Minister François-Philippe Champagne, who said last week he would issue his own decision “after there is clarity on the ongoing legal process.”

Jonathan Hood, a lawyer for the bureau, had suggested taking more time before the appeal, arguing on Tuesday that the tribunal’s ruling had already been rushed and that the appeal “is as important as it gets for merger law.”

Last week’s ruling came roughly two weeks after the parties made their final arguments in the case and detailed reasons were only published late Sunday evening, which was New Year’s Day.

Given the tribunal’s ruling, the bureau appears to face an “uphill battle” in the appeal process, Drew McReynolds, a telecom analyst with RBC Capital Markets, said in a research note Tuesday.

“While the timing of the deal closing continues to be somewhat uncertain, we believe there is a high likelihood that the transactions close with multiple paths to closing,” McReynolds said.

Hood said Tuesday the bureau’s appeal will likely focus mainly on legal arguments, not findings of fact made by the tribunal.

One of the bureau’s main arguments is that when it filed an application to block the merger, it was based on Rogers’ proposal to acquire all of Shaw. It was only after the bureau’s application was filed that Rogers struck the $2.85-billion side deal to sell Freedom Mobile to Vidéotron.

The bureau has said that the tribunal should have first considered whether the entire transaction would reduce competition and then look at whether the Vidéotron divestiture would be enough to offset that reduced competition.

The tribunal’s ruling slammed that approach as “divorced from reality” and also said that even if it had followed an analytical approach proposed by the Competition Bureau, it would have come to the same result.

Osborne said an appeal on these points will be interesting for competition lawyers but is unlikely to change the outcome of the case.

Rogers and Shaw have said they welcome the tribunal’s decision and denounced the Competition Bureau’s decision to delay it further with an appeal.

Jonathan Lisus, a lawyer representing Rogers, said on Tuesday that the tribunal has “now found as a fact that there is a public interest in consummating this transaction because it is pro-competitive.”

“There is a real, overriding, pressing commercial interest as well as an overriding public interest … to get this transaction done,” Lisus said.

When the process does eventually wrap up, the Competition Bureau could be facing a large legal bill, said Keldon Bester, co-founder of the Canadian Anti-Monopoly Project.

Filings published by the tribunal last week reveal the costs the companies as well as the bureau claimed they should receive if they were successful in the case: Rogers, Shaw and Vidéotron claimed costs of about $20 million while the bureau claimed about $11 million.

No order has been made yet, but Bester said that despite pursuing cases in the public interest, the Competition Bureau is not insulated from paying costs awards.


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