Government to Rubber Stamp Rogers Takeover of Shaw With a Caveat

The government said that it is going to rubber stamp the Rogers Shaw deal, but not allow all assets to be bought.

Competition in the carrier industry, as bad as it is in Canada, is one step closer to being a whole lot worse. Industry Minister, François-Philippe Champagne, says that he will rubber stamp the takeover, but under one condition. That condition is that Rogers won’t get to buy every asset. CBC tried to spin the decision to sound like he is still saying “no”, but it’s basically an approval of buying almost everything:

Industry Minister François-Philippe Champagne says he is concerned about the $26-billion proposed takeover of Calgary-based Shaw by Toronto-based telecom giant Rogers.

He says he won’t permit the transfer of all of Shaw’s wireless business to Rogers because it threatens competition and will make cellphone bills more expensive for Canadians.

The proposed acquisition of Shaw by Rogers is currently under review by three federal regulators.

These are Innovation, Science and Economic Development Canada, as well as the Canadian Radio-television and Telecommunications Commission and the Competition Bureau.

Now, what assets they don’t want to be transferred over isn’t clear, but presumably, one of those assets might be Freedom Mobile. Freedom Mobile was once known as Wind Mobile. Wind Mobile was brought over to Canada years ago as a way of trying to shake up the monopoly-like tendencies of the wireless sector. It was ultimately bought by Shaw in 2015 and had the name changed to Freedom Mobile. This after heavy lobbying by the other carriers to change foreign ownership rules and the use of other methods to ensure that Wind Mobile was unable to gain a foothold into the country. After many added hoops were thrown down by the legacy carriers, investors eventually bailed and forced the executives hand to sell the company.

While it was a disappointing outcome, it was the effort that was ultimately the closest to being successful in terms of bringing in real competition into the sector. Ever since, there wasn’t really an attempt to bring in competition into this sector.

The news is, no doubt, devastating for Canadian’s who have been forced to pay some of the highest rates in the world, making American rates seem like a bargain by comparison. So, when Canadians first learned of the deal in the making, they showed up in droves to overwhelmingly oppose the merger. They knew that this merger means higher bills, lower quality of service, less competition, and, of course, eventual layoffs. Experts all agreed that this deal is a rotten one for Canadians.

The article mentions that this still needs approval from three different agencies. The Canadian Radio-television and Telecommunications Commission (CRTC), of course, is widely expected not to do anything since they have basically become the Canadian poster child of regulatory capture. It’s unclear how the Innovation, Science and Economic Development Canada will react, but it looks like Liberals are for the merger, so that is probably a bad sign. That, of course, leaves the Competition Bureau which was what was subject to massive letter writing campaigns by Canadians. So, their choice is to either listen to Canadians, experts, and analysts who say its a bad deal or Rogers who stands to gain a bigger monopolistic hold in the carrier industry.

Either way, this is definitely a bad direction for the government to be heading. The obvious answer was to reject the deal outright, citing lack of competition in the sector and how this is a step in exactly the wrong direction. The government chose not to take the obvious rout and, instead, listen to Rogers. It’s not a done deal yet, but this is certainly not good news either.

Drew Wilson on Twitter: @icecube85 and Facebook.

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