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Canada sets out conditions for Rogers – Shaw merger

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A multibillion-dollar merger between Shaw Communications and Rogers Communications Inc., two of the biggest telecommunications businesses in Canada, was officially rejected by the federal industry minister.


“Today, I officially denied that request. My decision formally closes that chapter of the original proposed transaction,” said Canadian Industry Minister Francois-Philippe Champagne.


The US$19 billion merger between the two businesses was revealed in March, but it was met with opposition because it may limit consumer choice and drive up mobile costs. Shaw’s wireless spectrum licenses would have been completely transferred to Rogers as a result of the acquisition.


Shaw’s ownership of Freedom Mobile has been largely viewed as the biggest impediment to the deal’s ratification. Videotron, located in Montreal, agreed to purchase it for $2.1 billion earlier this year. Champagne stated that he wanted two specific commitments before approving the Videotron merger. Videotron would have to agree to maintain the Freedom wireless licenses for at least ten years and cut wireless pricing by around 20% in Ontario and Western Canada. The Minister did not say if a successful sale of Freedom Mobile would guarantee that the Rogers-Shaw merger would still be cleared.


In addition to Champagne’s permission, the Rogers-Shaw merger must be approved by the Competition Commissioner and the Canadian Radio-television and Telecommunications Commission (CRTC). In March, the CRTC granted conditional approval for the broadcasting side of the agreement.


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