TORONTO, Jan 24 (Reuters) – RA Canadian court on Tuesday dismissed the competition bureau’s effort to block Rogers Communications Inc’s (RCIb.TO) C$20 billion ($14.9 billion) bid to buy Shaw Communications Inc (SJRb.TO), in a boost to the companies’ efforts to close a deal struck nearly two years ago.
The deal, which would create Canada’s No. 2 telecoms operator, has faced opposition from consumer advocates, politicians and rival telecom companies. But the antitrust agency failed to convince the courts that the transaction is bad for consumers in a country where wireless bills are already among the highest in the world.
Tuesday’s rejection was the second blow in less than a month to the competition bureau’s efforts to kill the deal.
“It would be pointless to send this case back to the competition tribunal for re-decision,” Justice David Stratas told the court, calling many of the points of law the antitrust agency raised “without merit”.
The Federal Court of Appeal (FCA) in Ottawa swiftly dismissed the appeal without even hearing from Rogers and Shaw. The competition bureau has 60 days to appeal. The competition bureau did not offer an immediate comment.
National Bank of Canada analysts said in a note after the ruling that it was unlikely the bureau would appeal as the Supreme Court may not even agree to hear it.
“We’ve also written before that we can’t imagine how senior members of the Justice Department would allow such an appeal to be attempted to the top court,” the analysts said.
Rogers and Shaw shares extended gains on the decision, and both closed about 3% higher, while the benchmark Canadian share index (.GSPTSE) was flat.
Announced nearly two years ago, the deal has become a test case for the competition bureau’s ability to increase choices for consumers in Canada, where a handful of companies control large swaths of business.
The two companies are racing to close the deal before Jan. 31 deadline, which now requires a green light from the Canadian government. Industry Minister Francois-Philippe Champagne, who has the final say, said in a statement that he would review the court ruling, adding competition and affordability in the telecoms sector remained a top priority.
Rogers offered to sell Shaw’s Freedom Mobile unit to Quebecor’s (QBRb.TO) Videotron for C$2.85 billion to address antitrust concerns, but the competition bureau argued that a merged Rogers-Shaw would not have a viable competitor in Quebecor.
The bureau appealed to the FCA after the competition tribunal, a quasi-court that handles merger disputes, approved the deal on Dec. 30. Judges spent the morning grilling competition bureau counsel on their case against the transaction.
“According to the tribunal, this was not a particularly close case,” the judge told the court on Tuesday. It found, I would say, on the evidence rather decisively that there was no substantial lessening of competition.
“They also found a number of pro-competitive considerations.”
Rogers and Shaw did not respond to a Reuters request for comment.
“The deal the tribunal accepted is still terrible for ordinary Canadians,” said Matt Hatfield, campaigns director at OpenMedia, a lobby group that campaigns to keep Internet access easy and affordable.
Rogers buying Shaw means less choice and more expensive prices for every consumer in Canada.
Reporting by Maiya Keidan in Toronto, additonal reporting by Chavi Mehta and Ismail Shakil; Editing by Denny Thomas, Mark Porter and Deepa Babington
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