Court rejects watchdog’s appeal

Deal, including sale of Freedom Mobile to Vidéotron, only needs innovation minister’s approval

Rogers and Shaw won a decisive victory at the Federal Court of Appeal, which upheld a ruling in favour of their $26-billion merger.

The telecom takeover was before the appellate court on Tuesday after the Competition Bureau appealed last month’s ruling from the Competition Tribunal.

The tribunal found the deal, plus a separate transaction to sell Shaw’s Freedom Mobile wireless business to Vidéotron, would not seriously reduce competition or lead to materially higher prices in the wireless business.

A three-judge panel of the Federal Court of Appeal upheld that ruling on Tuesday, largely paving the way for the transactions to close by deadline Tuesday. The only remaining question is whether Federal

Innovation Minister FrançoisPhilippe Champagne will offer his blessing in time.

“Close, this case was not,” said Justice David Stratas, who read the panel’s decision aloud after the court returned from an extended lunch break.

Stratas cited the dozens of witnesses the Competition Tribunal heard from over the course of a four-week trial, the thousands of pages of evidence it reviewed and the lengthy written decision it released at the end of December.

Lawyers for the Competition Bureau argued that the tribunal made a legal mistake by considering the impact of both the deal for Rogers to acquire Shaw and the divestiture of Freedom Mobile to Vidéotron.

The bureau argued that the tribunal should have first considered whether Rogers acquiring all of Shaw would have reduced competition significantly and then looked at whether the sale of certain assets to Vidéotron could “remedy” that problem.

The Federal Court of Appeal rejected that argument. “Examining the merger alone, a merger that by itself will not and cannot happen without the divestiture, would be a foray into fiction and fantasy,” the ruling said.

“It is a total annihilation of the (Competition Bureau’s) case on appeal,” said Michael Osborne, chair of the competition law practice at Cozen O’Connor in Toronto.

He said the bureau has 60 days to seek leave to appeal to the Supreme Court, a move he called “inadvisable” after “going down in flames” at both the tribunal and the appellate court.

“Regarding my decision on the request to transfer spectrum from Shaw to Vidéotron, I will render a decision in due course. Promoting competition and affordability in the telecom sector has been and remains my top priority,” Champagne said in a statement posted on Twitter Tuesday. He said he is reviewing the court’s ruling closely.

An array of consumer advocates, business rivals and political opponents argue the transactions represent continued consolidation in the telecom space, already dominated by large companies, and will be bad for Canadians.

Brian Masse, the NDP MP who serves as critic for the Innovation portfolio, slammed the court ruling in a statement Tuesday, adding, “the Liberals must step in and stand up for consumers by blocking this merger now.”

Representatives for Rogers, Shaw and the Competition Bureau did not immediately comment Tuesday.

‘‘ I will render a decision in due course. Promoting competition and affordability in the telecom sector has been and remains my top priority.

INNOVATION MINISTER FRANÇOISPHILIPPE CHAMPAGNE