The fate of Rogers Communications Inc. proposed takeover of Shaw Communications Inc. goes before the Federal Court of Appeal today as the Competition Bureau seeks to overturn the Competition Tribunal's approving the deal. Rogers and Shaw applications are pictured on a cellphone in Ottawa on Monday, May 9, 2022. THE CANADIAN PRESS/Sean Kilpatrick
OTTAWA – Competition Bureau lawyers presented arguments before the Federal Court of Appeal Tuesday morning in an effort to overturn the Competition Tribunal’s approval of Rogers Communications Inc.’s proposed takeover of Shaw Communications Inc.
The bureau’s arguments focused on what they say are four key legal errors that focus especially on how the proposed sale of Shaw’s Freedom Mobile to Videotron, as a way to ease competition concerns, factored into the tribunal’s decision.
Bureau lawyer Alexander Gay argued that the way the tribunal assessed the deal led it to factor in a series of concessions Rogers has agreed to grant to Videotron to help boost the competitive position as it expands outside of Quebec.
The concessions, such as discounted access to internet infrastructure, should not have been factored in, Gay said, because they are behavioural commitments that are not reliable or enforceable enough, and that wouldn’t have been in play had the tribunal properly assessed the proposal.
“It’s almost entirely a series of service agreements between competitors. Those couldn’t have been considered,” said Gay.
“That is a huge error. And that I think gives enough doubt in this case that really it should be sent back for that very reason. Just that reason alone.”
Rogers, which is set to present its side in the afternoon, argued in court submissions that the tribunal properly considered the combined deals between Rogers, Shaw and Videotron as the proposed merger, rather than the sale of Shaw’s Freedom Mobile to Videotron as a side remedy, which changes the burden of proof.
The company however also noted that the tribunal said that even if the burden of proof was shifted it would have been satisfied, and that it concluded that a Videotron-owner Freedom would not be dependent on Rogers.
Rogers, arguing the bureau has relied on indirect attacks rather than core questions of law, said in its filings that the bureau’s arguments are “an attempt to sew doubt without proving palpable and overriding error.”
Federal Court of Appeal justices also emphasized in their questions the high threshold required to overturn a tribunal decision in pointed questions to bureau lawyers.
The way the tribunal assessed the evidence, however, leaves enough of a gap that it should be re-heard, said Gay.
“I think we’re left with doubt, and that doubt has to be cleared …. certainly a case of this nature, where it affects millions of Canadians in western provinces who are cellphone users. I think they deserve to know.”
The hearing at the Federal Court of Appeal in Ottawa runs a single day with a decision date on the appeal not yet set, as the extended Jan. 31 closing date of the deal approaches.
This report by The Canadian Press was first published Jan. 24, 2023.
Companies in this story: (TSX:RCI.B; SJR.B)
