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Rogers-Shaw say mediation fails to resolve regulator's objections to deal

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Rogers and Shaw applications are pictured on a cellphone in Ottawa on Monday, May 9, 2022. THE CANADIAN PRESS/Sean Kilpatrick

TORONTO — Talks between the Competition Bureau and Rogers Communications Inc. and Shaw Communications Inc. this week failed to resolve the regulator's objections to their merger, the companies said Wednesday.

Carleton University professor Dwayne Winseck said the result suggests the proposed sale of wireless carrier Freedom Mobile to Quebecor Inc. is not enough to ease the regulator's concerns about the proposed merger, especially since the Shaw Mobile business would be retained.

"It's not at all clear if this deal will pass muster with the Competition Bureau full-stop," Winseck said.

"The Competition Bureau has laid its case against the proposed merger on the grounds that the whole thing is deeply problematic ... and just chopping off bits and pieces of it are probably not going to be good enough." 

Rogers and Shaw met with the competition watchdog on Monday and Tuesday as part of a mediation process. The regulator has been trying to block the merger, arguing that it would result in less choice for Canadians and lead to higher bills for consumers.

The Competition Bureau has said that the sale of Freedom wouldn't replace the growing competition Shaw Mobile would deliver in Alberta and British Columbia and would ultimately make it a weaker competitor.

In their statement, Rogers and Shaw said the review process of their deal would continue as previously disclosed, adding that they are open to continuing talks with the regulator at any time.

The companies said they intend to continue to work to highlight the benefits of their merger, including the proposed sale of Freedom to Quebecor Inc.

Morningstar analyst Matthew Dolgin didn't have high hopes for mediation, but still viewed the lack of a resolution as a negative for the fate of the deal since it was another avenue that could have moved it forward.

"However, I did and still do have higher hopes that the two sides can reach an agreement among themselves, and if they don’t and the case goes before the Competition Tribunal, I think Rogers and Shaw have a strong case in their favour," he said.

The Rogers-Shaw transaction already has approval from shareholders and the Canadian Radio-television and Telecommunications Commission, but remains subject to review by the Competition Bureau and the Minister of Innovation, Science and Economic Development.

On Monday, Alberta filed a notice stating its intention to intervene in Competition Tribunal proceedings regarding the deal.

This report by The Canadian Press was first published July 6, 2022.

Companies in this story: (TSX:RCI.B, TSX:SJR.B, TSX:QBR.B)

The Canadian Press