Minister hears from deal critics, defenders

Academics, bureaucrats and company executives weigh in before MPs at committee Rogers and Shaw have cleared almost every hurdle on the path to closing their merger

As Innovation Minister FrançoisPhilippe Champagne weighs the fate of the Rogers-Shaw merger, champions and opponents of the deal are making their final pitches on the blockbuster telecom takeover.

During a meeting of the House of Commons industry committee on Wednesday, an array of witnesses told lawmakers what they believe the minister should do, from blocking the deal outright to imposing new conditions tied to better prices for consumers.

After a court dismissed an appeal by the Competition Bureau on Tuesday, the companies have cleared almost every hurdle on the path to closing their $26-billion merger, which includes a side deal to sell Shaw’s Freedom Mobile wireless business to Vidéotron.

All that’s left is for Champagne to rule on an application to transfer licences for wireless spectrum (the airwaves used to build cellphone networks) from Shaw to Vidéotron.

With the minister’s decision expected soon — he said Tuesday he would announce it “in due course” and the companies have a Jan. 31 deadline to close the deal — the committee heard a wide range of suggestions from academics, government bureaucrats and company executives.

“The minister has broad powers to act in the public interest,” said telecom researcher Ben Klass. “He still has a chance to do what he should have done when the merger was announced: Stop it in its tracks.”

But Jennifer Quaid, a civil law professor and vice-dean of research at the University of Ottawa, said it would not be that simple for the minister to block the deal, which has now been cleared in the courts after a lengthy legal process during which the Competition Tribunal concluded the transactions would be good for competition.

Blocking the spectrum transfer in that context would “look like political interference or a kind of workaround,” Quaid said. (NDP MP Brian Masse disagreed on this point, noting that the tribunal itself was a political creation.)

Champagne said in October that if Vidéotron wanted his approval on the spectrum transfer, it would have commit to the market for at least 10 years and offer lower prices in Ontario and Western Canada.

Pierre-Karl Péladeau, CEO of Vidéotron owner Québecor, said his company attracted more than 20 per cent of wireless subscribers in Quebec by offering lower prices and using innovation such as a discount brand with digital-only customer service. He said he plans to use similar strategies in the areas where Freedom operates.

Keldon Bester, co-founder of the Canadian Anti-Monopoly Project (which receives funding from Globalive, an investment company that tried to buy Freedom Mobile), said the minister could strengthen his conditions further. He said the government could set “more aggressive benchmarks for pricing” as well as timelines and consequences for not living up to the conditions.

On the timing of the deal, Rogers CEO Tony Staffieri said he did not want to speculate on what would happen if the process goes beyond the deadline of Jan. 31.

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The minister has broad powers to act in the public interest. He still has a chance to do what he should have done when the merger was announced: Stop it in its tracks.

BEN KLASS TELECOM RESEARCHER