Canada's antitrust regulator plans to block Rogers $16B takeover of Shaw

Timon Schneider/iStock Editorial via Getty Images

Canada's antitrust regulator informed Rogers Communications (NYSE:RCI) and Shaw Communications (NYSE:SJR) of its intention to oppose the $16 billion transaction.

Rogers (RCI) and Shaw said they remain committed to the deal, according to a joint statement Saturday. Rogers and Shaw plan to oppose the application to prevent the deal made by the Commissioner of Competition, while continuing to "engage constructively" with the Competition Bureau.

The companies have been trying to remedy the regulator's concerns through proposing the full sale of Shaw’s wireless business, Freedom Mobile. Globalive Capital offered C$3.75 billion to buy Freedom Mobile from Shaw (SJR), the Globe and Mail reported in March.

The Canadian antitrust opposition comes after The Canadian Radio-television and Telecommunications Commission agreed to allow the combination in March.

Shaw and Rogers agreed to extend the outside date for the transaction until July 31 and the companies will will continue to seek approval of the Transaction from the Ministry of Innovation, Science and Economic Development.

Approval from Canada's federal innovation department may also prove a difficult task as Innovation, Science and Industry Minister François-Philippe Champagne indicated in comments in March.

"The wholesale transfer of Shaw’s wireless licenses to Rogers is fundamentally incompatible with our government’s policies for spectrum and mobile service competition, and I will simply not permit it," Champagne said at the time.

Rogers (RCI) announced its agreement to acquire Shaw (SJR) in March of last year.

Comments

[Yield on Cost]

Planning to block is not the same thing as blocking. Odds are much higher that deal will happen than not. Why? When has Rogers not gotten what it wants.

[pythagoras925]

Good summary: www.theglobeandmail.com/...

[Virtue16]

Can you spell "M-O-N-O-P-O-L-Y"???

[Dale Roberts]

Policy of competition. What a joke.

There is no need for competition. Just regulate the space properly. The big telcos pay tens of billions to create and support the much-needed national digitial infrastructure.

And stop taxing the hell out of them. Of course they have to pass that along to consumers.

The NDP and Liberals are ignorant anti-business folks, with no business experience.

You could go to the Liberals if you wanted to start a University, but not if you want a reasonable government ;)

[Gary Gambino]

@Dale Roberts what are your thoughts on the chances of the companies prevailing in court?
Disclosure: I just sold my SJR shares for a 1.6% capital gain. 19% upside to the deal value but over 30% downside to the SJR price before the deal was announced. Not worth the added risk and uncertain deal close timing.

[Dale Roberts]

@Gary Gambino Hi Gary, sorry I'd have no guess on that.

[Damon Judd]

Interesting. I think Rogers believed they had it in the bag.

[Baloney Sandwitch]

OK it's dead. They can engage constructively all they like but it isn't happening.

[DrT]

Canada has been notoriously lax at enforcing anti-trust principles. Generous political contributions, and probably under the table money, alway greased the wheels. Years ago, the Chretien government allowed two of the country's biggest bread makers to merge for no sensible reason. So we have the highest bread prices in the world. Later, the retailers were found guilty of colluding on bread prices. Easy when there's so few sources of supply. The phone companies are notoriously large political donators. I'd be surprised if this doesn't go through.

[montereymd]

@DrT Agree just look at the Canadian Housing market- its a cesspool of money laundering, fraud, bribery and tax evasion. It's one of the only things keeping Canada's economy afloat based on offering safe haven to some of the most corrupt money world wide. It's a safe haven in the world Canada does nothing to protect except sponge off the US for safety against world aggressors

[Watermark2]

Most Canadian users hope that it will be blocked as we pay some of the highest user fees in the world for phone and internet. If Rogers wins we will only pay a lot more regardless what the CRTC says. It's disgraceful!

[Tobias Schmitz]

@Watermark2
True. Then again a sparsely populated country like Canada is not exactly the ideal background for telco competition. 85% of the Canadian population live within 100 miles of the US border, but stretched out over the whole continent. Easiest way to get real competition in the telco market is probably to plug in to the US market.
As long as the Canucks are trying to go it alone, they'll be ripped off by monopolies, that are masquerading as competitors.

[Virtue16]

@Tobias Schmitz The invention of satellite transmission really shrinks Canada's size. It was different when wires had to be run through vast expanses.