© Reuters. FILE PHOTO: A person walks near the Rogers Communications building in Toronto, Ontario, Canada on October 22, 2021. REUTERS/Carlos Osorio
By Akash Sriram and Divya Rajagopal
(Reuters) -Rogers Communications Inc on Friday asked a tribunal to scrap Canada competition bureau’s rejection to its C$20 billion ($15.9 billion) purchase of Shaw Communications (NYSE:) Inc, arguing the merger would create more competition rather than stifle it.
Calling the opposition to the deal “unreasonable”, Rogers (NYSE:) said the bureau had failed to quantify the reasons the proposed merger with Shaw would lessen competition. It added that any alleged competitive effects were outweighed by the “significant efficiencies the transaction will generate.”
Rogers, in a 19-page petition to the tribunal, responded to the bureau’s refusal to accept the divesture of Freedom mobile as part of the merger remedy. Rogers asked the tribunal to dismiss the bureau’s application to block the deal.
In Canada, the top three companies – Rogers, BCE (NYSE:) Inc and Telus (NYSE:) Corp – account for almost 90% of the telecom industry revenue and consumers paid the highest mobile bills in the world in 2021, according to a report by Rewheel, a Finnish telecom research firm.
The high wireless rates are a hot-button issue and the government has vowed to bring it down.
The competition bureau blocked the deal and said it was not convinced Rogers’ proposal to sell Freedom mobile would keep competition alive in the sector. Freedom is a low-cost wireless service provider with about 1.7 million subscribers.
Rogers rebutted the bureau’s claims and said Freedom mobile on its own would remain competitive even after its split from Shaw as it is run as an independent business. It said a “divested Freedom will have the same economic incentive to compete as it had when owned by Shaw.”
The bureau argued the new buyer of Freedom would be unable to expand and deploy 5G network to bring down the wireless prices.
Rogers disputed the bureau’s claims that Shaw was a direct competitor to the company, saying its main competitors were Bell and Telus.
This week, Rogers agreed to put the deal on hold.
($1 = 1.2588 Canadian dollars)