Independent ISP TekSavvy has made an application to the CRTC to investigate portions of the Rogers-Shaw merger, claiming wholesale arrangements made as part of the related sale of Freedom Mobile violate the Telecommunications Act.
Specifically, TekSavvy claims the deal violates Section 27, which states that carriers cannot give “undue preference” in the rates its charges, including to itself.
Last year, Videotron agreed to acquire Freedom Mobile from Shaw as part of a remedy proposed to address concerns about competitive impacts the merger with Rogers would have on the wireless sector. The Quebec telco plans to use the acquisition to expand nationally, but splitting Freedom from Shaw means it would need to lease access to cable infrastructure from Rogers post-merger.
During hearings late last year, the Competition Bureau said one of the reasons it was opposed to the merger was because Videotron could not be competitive outside of Quebec at the minimum rates the CRTC mandates for telcos to lease access to infrastructure. Rogers responded by saying it would give Videotron a preferential rate that is below the CRTC minimum.
TekSavvy argues that this amounts to preferential treatment and anti-competitive behaviour. It is asking the CRTC to investigate and rule that the deal is in violation of Telecommunications Act. As part of the application, TekSavvy cited the Competition Tribunal’s decision on the merger, which described Rogers’ arrangement with Videotron as “very favourable,” “preferential” and “discounted.”
“These arrangements were not arrived at through negotiations based on natural market forces, but are instead an effort by Rogers to remove regulatory hurdles to its acquisition,” the company said in a statement.
The company also said the arrangement would allow VMedia to compete better than it had previously. Like TekSavvy, VMedia was an internet wholesale company, which purchases wireless and internet service from larger telcos at wholesale rates in order to offer discounts to customers. Videotron acquired VMedia last year.
TekSavvy’s formal complaint raises similar issues to those it brought to Minister of Industry, Science and Technology François-Philippe Champagne, who still needs to sign off on the merger, earlier this month. That decision is not expected to come until after a Jan. 24 appeal is heard regarding the Competition Tribunal’s ruling that the deal should proceed.
The CRTC previously signed off on the merger, though it came with a long list of conditions. The regulator’s review was also primarily concerned with impacts on the broadcasting sector and local news, but violations of the Telecommunications Act fall under its jurisdiction.
