Canada’s federal appeals court will hear Tuesday whether Rogers Communications Inc.’s hotly contested $20 billion bid. on Shaw Communications Inc. passage or can be blocked, as recommended by the competition office.
The suit in a federal appeals court in Ottawa is the antitrust agency’s latest effort to stop the deal, as the transaction will reduce competition in Canada’s telecom industry, which has some of the highest mobile bills in the world.
But the agency failed to convince the Competition Tribunal, a quasi-court that hears merger disputes, that the deal harms Canadian consumers. It was approved on December 30.
The deal, announced nearly two years ago, has become a test case for the competition agency’s ability to increase consumer choice in Canada, where a handful of firms control large groups of firms.
At stake is one of Canada’s largest ever M&A deals, along with millions of dollars in legal and financial advisory fees. Investors have been watching the outcome closely, and Shaw shares have rallied in recent months on optimism about the success of the deal.
Rogers offered to sell Shaw’s Freedom Mobile unit to Quebecor’s Videotron for $2.85 billion to address competition concerns, but the competition agency argued that a merged Rogers-Shaw would have no viable competitor in Quebecor. Shaw and Rogers plan to close the deal by January 31, though the UKTN could be extended in consultation with Quebecor.
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“I think the appeal will be dismissed,” said Michael Osborne, a competition attorney at law firm Cozen O’Connor. “I think it’s a bad appeal. That’s why I think the Court of Appeal will make sure it’s ready in time for the parties to close.”
A spokesman for the competition agency declined to comment while the case is pending in court.
It is not known whether Tuesday’s hearing will lead to a verdict on the same day. Canada’s Industry Minister Francois-Philippe Champagne, who has the final say on the matter, has said he will not make a separate decision until “there is clarity about the ongoing legal process”.
“It is possible that the FCA will hear the (competition agency) arguments and make its decision without even listening to the companies, or that the hearing could begin on January 24 with a decision by the bank at the end,” National Bank or Canada, analysts said in a note last week.
They noted that the agency could also appeal to the Supreme Court and would have 60 days to do so, but Osborne said it depends on the outcome of the hearing whether they can move forward with the appeal.
“If the Federal Court of Appeals rejects this thing on the day of the appeals court, there’s not a good chance they’ll get a leave of absence from the Supreme Court,” Osborne said.