Rogers-Shaw Merger Approved

After more than two years since Rogers first announced it would acquire Shaw in a $26 billion deal, the federal government has approved the deal. On the deadline day, the federal government approved the merger between Rogers Communications and Shaw Communications, creating a new major telecommunications company.

One of the big sticking points of the deal has been the government's insistence on affordability and competition among telecom companies. Combining Canada’s two biggest telecom companies could increase prices while reducing network and plan availability.

The Rogers-Shaw merger creates a new mega-telecom company that can take on Bell and Telus. Already though, the Big Three telecom companies own 90% of the market and charge some of the highest wireless rates in the world.

“These types of deals lead to higher prices for consumers, they lead to reduction in choice,” telecom policy researcher Ben Klass told CBC News. “It’s a slightly less bad deal than was initially proposed but that doesn’t change the fact that the flavour is still not good.”

The government has created stipulations for the deal, mandating that Rogers create new jobs in western Canada and invest $1 billion in broadband internet access for Canadians, plus an additional $5.5 billion to expand its mobile network.

Vidéotron becomes a Big Four teleco

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A central sticking point was Freedom Mobile, a regional cell phone company created to encourage competition among wireless providers and a subsidiary of Rogers.

The Canadian Radio-television and Telecommunications Commission ordered Rogers to divest its stake in the subsidiary. 

“The evidence is clear: Having a strong fourth competitor does lead to lower prices,” François-Philippe Champagne, Minister of Innovation, Science and Industry, said in a statement approving the deal.

Vidéotron is purchasing Freedom Mobile for $2.85 billion from Shaw Communications. (Vidéotron is a division of Quebecor.) The deal was a condition of the acquisition of Shaw by Rogers.

“This transfer follows a series of agreements signed by the parties that will ensure that this new national fourth player will be in it for the long haul, be able to go toe to toe with the Big Three, and actually drive down prices across Canada,” Minister Champagne continued, pitching the deal as a win for consumers.

As a condition of the merger agreement, Vidéotron and Rogers will face heavy fines if they do not comply.

The merger deal officially closed on Monday, April 3.