Industry Minister François-Philippe Champagne laid out strict conditions under which he would allow Quebecor Inc. QBR-A-T to acquire Shaw Communications Inc.’s SJR-B-T wireless business, a transaction that could help clear the way for Shaw’s proposed $26-billion merger with Rogers Communications Inc RCI-B-T.
He made his comments days before Rogers and Shaw were set to head into mediation with a settlement proposal aimed at resolving the Competition Bureau’s opposition to the merger. The federal body is attempting to block the deal, arguing it would result in higher cellphone bills, poorer service and less choice for consumers.
Mr. Champagne has likewise expressed concern about the deal’s ramifications for consumers. His conditions, which he outlined in a news conference on Tuesday evening, include that Quebecor agree not to sell Shaw’s wireless spectrum licenses for at least 10 years, and that it commit to bringing down cellphone bills outside of Quebec. (Spectrum refers to the airwaves used to transmit wireless signals.)
Rogers, Shaw, Quebecor say mediation talks with Canada’s competition watchdog failed to resolve merger objections
Willis: Competition Bureau signals it is prepared to fight rather than settle over Rogers-Shaw deal
Mr. Champagne’s department is tasked with reviewing the transfer of Shaw’s wireless licenses to Quebecor.
Rogers and Shaw struck a deal in June to sell Shaw’s Freedom Mobile – Canada’s fourth-largest wireless carrier – to Quebecor’s Videotron Ltd. for $2.85-billion. The sale is intended to address the Competition Bureau’s concerns that allowing Rogers to absorb Freedom along with the rest of Shaw would harm consumers by reducing competition in the wireless market. Quebecor has said the deal would allow it to expand outside of its home market of Quebec.
Mr. Champagne told reporters that, if Quebecor acquires Freedom, he expects wireless prices in Ontario and Western Canada to be comparable to what Montreal-based Videotron is currently offering in Quebec. Those prices are, on average, 20 per cent lower than wireless prices in the rest of Canada, Mr. Champagne said.
It’s not clear how any pledge relating to wireless prices would be enforced.
“A new service provider needs to be in it for the long run,” Mr. Champagne said, referring to his expectation that Quebecor would not sell the wireless spectrum licenses for at least a decade.
When Rogers and the Competition Bureau head into mediation on Thursday, three sources told The Globe, the two sides will discuss a settlement proposal that Rogers has put forward. The Globe is not identifying the sources because they were not authorized to discuss the proposal publicly.
The proposal would require Rogers to sell fibre-optic infrastructure to Quebecor, in an attempt to resolve the Competition Bureau’s concerns that the Montreal-based company doesn’t own enough infrastructure outside of Quebec to support Freedom’s wireless business in other provinces, one of the sources said.
Freedom, which has customers in Ontario, Alberta and British Columbia, has been credited with reducing wireless prices in recent years.
Pierre Karl Péladeau, Quebecor’s president and chief executive officer, said in a statement that the company intends to accept the conditions imposed by Mr. Champagne, because they are in line with the company’s commercial strategy.
A spokesperson for Rogers declined to comment on the settlement proposal. A spokesperson for Quebecor could not immediately be reached for comment.
Mr. Champagne said he is not dictating how the parties should conduct their mediation process, but he noted that he has final approval over the spectrum transfer, which is crucial to the merger.
“At the end of the day, they need to come back to me. So let me be very clear: I think they had better take notice of what I’m going to be looking at. And these two things, for me, are fundamental,” Mr. Champagne said.
There is no guarantee the mediation will result in a settlement. If it does not, the parties will begin a weeks-long hearing in front of the Competition Tribunal, starting Nov. 7.