Canada’s Competition Law Enforcement Has Failed: Innovation Minister Rubber Stamps Rogers Shaw Merger

Canadian Innovation Minister, François-Philippe Champagne, has stopped pretending and rubber stamped the Rogers Shaw merger.

Canadian cell phone and internet rates are now set to skyrocket. The Innovation Minister, François-Philippe Champagne, has rubber stamped the Rogers Shaw merger, making it all but official that Canadian’s will be living under a telecom triopoloy. The new makeup of the telecom sector is set to be simply Rogers, Telus, and Bell. Last month, the Canadian government released the results of a study that showed that Canadians pay some of the highest internet and cell phone rates in the developed. Since Canada approved of the deal, it almost feels like the government decided that it won’t stop until Canada is the most expensive in all categories.

Reports suggest that the deal will require the creation of 3,000 jobs (place your bets when the mass layoffs happen), lower prices (the population of Canada laughs), and spinning off Freedom Mobile to Videotron (who is still pretending that will make a difference?).

OpenMedia has been helping to lead the charge to stop the merger. Not surprisingly, they are less than thrilled by the decision.

“This is a dark day for the Internet in Canada. Today’s decision is the largest blow to telecommunications competition and affordability we’ve ever seen,” said OpenMedia Executive Director Laura Tribe. “Minister Champagne has turned his back on Canadians, and has crowned Rogers the effective ‘king’ of Canada’s internet – the single largest company in our already overly centralized market. It’s hard to reconcile this week’s federal budget filled with promises of affordability measures, with such a direct assault on choice and affordability for Internet connectivity. It’s a massive betrayal that’s only made worse coming from a government that has long-promised improved telecom affordability. Despite press releases claiming otherwise, Minister Champagne’s putting the nail in the coffin of competition in telecommunications in Canada. At this point, there’s only one thing he can do to save our downward spiraling telecom sector: full-scale competition reform in Canada. Without it, we could easily be looking at a Bell and Telus merger next.”

The organization pointed out that weaknesses in enforcing competition laws are partly to blame:

While Minister Champagne is claiming that his proposed terms of this deal are conditions of approval, a number of these terms were actually part of the original proposal in 2021 from Rogers. This includes the $1Bn commitment for investment in rural, remote, and Indigenous connectivity, an investment in 5G network expansion, and maintaining a head office in Western Canada.

The Competition Bureau, Canada’s competition watchdog, opposed the Rogers-Shaw deal in full. Unfortunately, the Competition Tribunal ruled that the deal could go through, which was reinforced earlier this year when the Federal Court of Appeal rejected the Competition Bureau’s appeal of the Competition Tribunal’s decision on the buyout. Weaknesses in Canada’s competition law are a key barrier to blocking giant acquisitions such as Rogers-Shaw, even if they are not in the public interest.

Since the Rogers-Shaw buyout was initially proposed in March 2021, OpenMedia and allies have delivered over 83,000 messages from concerned people in Canada calling on policymakers to block the Rogers-Shaw deal. A further 10,000 members of OpenMedia’s community have signed a petition calling on Minister Champagne to take concrete action to curb the dominance of telecom giants like Rogers, Bell, Telus, and Quebecor. And over 23,800 actions taken by the OpenMedia and Ekō communities in support of the Anti-Monopoly Charter.

Indeed, this does lead to a serious question of what the point of Canadian competition watchdogs are for. The Competition Bureau was the only watchdog to actually stand up for Canadians and oppose the merger. Unfortunately, their efforts fell short to protect Canadian’s despite their best efforts. For every other step along the way, different levels simply acted as a rubber stamp, simply regurgitate the monopolistic corporations talking point that the deal is a good one for Canadian’s. In fact, the CRTC couldn’t rubber stamp the deal fast enough because they got their marching orders from their corporate masters. The Innovation Minister spent a good chunk of time pretending to care about the concerns, but the time for pretending is now over for him.

While Canadian’s are set to lose big time in all of this, the least surprising aspect in all of this is that top executives stand to gain a whole lot. Already, there are $17 million earmarked for bonuses for them. From the Toronto Star:

Tony Staffieri and the other top executives at Rogers stand to receive bonuses worth $17 million if the Shaw takeover closes and the combined company meets certain performance targets over two years.

Staffieri, who became CEO of Rogers in January 2022, will receive $8 million in stock options if the deal closes but not before meeting the undisclosed one- and two-year milestones, the company revealed in a regulatory filing on Friday. (He will not receive any of the options immediately upon closing.)

Rogers first announced its $26-billion deal to acquire Calgary-based Shaw in mid-March 2021 but has faced numerous hurdles to closing the landmark telecom transaction.

The other four executives named in the management information circular are set to receive similar stock options tied to one- and two-year targets of either $2 million or $2.5 million each.

So, little wonder who ends up winning in all of this. In fact, we are already following the mega merger playbook like clockwork.

In all of this, though, Canadians are going to be the ones that lose in all of this. While officials pretend to have done their job, the truth in the matter is that, save for the Competition Bureau that actually did something about this disaster, the enforcement of Competition Laws have completely and utterly failed Canadian’s. There is no reason that reducing competition by 25% in an entire sector in one single deal shouldn’t be raising any red flags. This deal should have been blocked pretty much immediately. Sadly, the government and its respective departments have little interest in working for Canadians. Now, Canadians are going to have to pay the price for all of this.

Drew Wilson on Twitter: @icecube85 and Facebook.

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