One more regulator still needs to sign off on the proposed merger between Rogers and Shaw, and TekSavvy has called on him to say no.
The wholesale ISP has asked Minister of Industry, Science and Technology François-Philippe Champagne to block the merger by denying the transfer of Shaw’s wireless spectrum licenses and Freedom Mobile business to Vidéotron.
Last week, the Federal Court of Appeals granted the Competition Bureau an appeal to a ruling made by the Competition Tribunal that would clear a path for the Rogers-Shaw deal to close. Champagne still needs to approve the deal, but has said he will wait until the Competition Bureau’s procedure is settled to render a decision.
Among the things the Competition Bureau took issue with in front of the Competition Tribunal hearing was the fact that the deal would make Videotron reliant on Rogers’ network in Western Canada, and therefore vulnerable to anti-competitive behaviour. During the Competition Tribunal hearing, the Competition Bureau pointed out that Videotron could not be competitive while paying the rates set by the CRTC for wholesale access to networks, which Rogers responded to by saying it will give Videotron preferential rates below the CRTC regulated minimum.
This is the crux of TekSavvy’s complaint, with Peter Nowak, VP of insight and engagement, claiming in a statement that this preferential access will squeeze out other ISPs and drive internet prices higher. TekSavvy was also not among the witnesses that testified during several weeks of hearings conducted by the Competition Tribunal.
TekSavvy is the only large wholesale internet provider remaining in Canada. Wholesale providers purchase access to networks from the likes of Rogers and Bell in bulk, using the savings to re-sell the service to its customers at a lower rate. But in 2021, a CRTC ruling reversed a pair of its own previous decisions that lowered the rates wholesalers would have to pay to incumbent telcos to access their networks. That put further pressure on wholesalers that were already struggling during the pandemic, leading the likes of Ebox, Distributel and V-Media all exiting the market since the decision.
In 2021, shortly after the Rogers-Shaw deal was announced, TekSavvy told the government’s Standing Committee on Industry, Science and Technology that the deal was almost certain to harm competition. It said the only way the deal should be allowed to go through is if the CRTC were to implement its previous rate cuts, give consumers more choice on fibre services and mandate similar wholesale operators for mobile.
The Competition Bureau’s appeal has been set for Jan. 24. Rogers and Shaw have both said that the deal would be at risk of falling apart if it is not close by the end of this month.
