Canada’s merger court has ruled in favor of Rogers Communications and Shaw Communications in a major antitrust case, removing one of the final barriers to the merger of two of the country’s largest telecommunications companies. The decision follows a month-long hearing that included evidence from 45 witnesses and thousands of pages of documentation.
The merger of Rogers and Shaw has been in the works for almost two years and was always expected to face scrutiny from competition authorities. One key concern was the consolidation of the Canadian mobile sector through Rogers’ acquisition of Shaw’s Freedom Mobile. To address this, the companies pledged to sell Freedom Mobile to the smaller mobile network operator, Videotron.
After considering this concession, the Canadian Competition Tribunal ruled that the acquisition could proceed, provided that Shaw first completes the disposition of Freedom Mobile. The Competition Bureau had requested that the tribunal block the merger entirely, claiming that it would lead to higher prices, worse service, and less choice for mobile phone customers.
However, the Competition Tribunal determined that the federal antitrust commissioner had not successfully proven that the deal would harm competition in the industry. It found that the merger is not likely to result in significantly higher prices, a decline in service quality, or a decrease in innovation.
Following the merger approval, shares of both companies saw significant increases. Shaw rose 9% to C$39.06, and Rogers rose nearly 6% to C$63.51.