Rogers Communications and Shaw Communications are pausing on their proposed merger for the time being. This arrangement gets them off the hook for a possible interim injunction imposed by Canada’s competition regulators.
The telecom companies won’t proceed with closing their proposed merger until either a negotiated settlement is agreed with the Commissioner of Competition or the Competition Tribunal has ruled on the matter.
The companies say this new agreement gives them time to focus on addressing the Commissioner’s concerns in order to reach a settlement.
Earlier this month, the Commissioner filed papers to potentially block Rogers' $16-billion purchase of Shaw, saying the merger will lead to higher prices and fewer choices, particularly in the wireless sector.
About 87% of Canadian wireless subscribers are served by Rogers, Bell Canada and Telus. A particular concern of the Competition Bureau is that Shaw owns Freedom Mobile – a lower-priced competitor, which provides wireless services to more than two million customers in Ontario, Alberta and British Columbia. Freedom Mobile is Canada’s fourth largest mobile provider.
Shaw is currently trying to divest its Freedom Mobile wireless business.
In their announcement this week, Rogers and Shaw said they strongly believe the merger is in the best interests of Canadian consumers. But they added that if “a Tribunal hearing is ultimately required to address the Commissioner’s application to prevent the transaction, Rogers and Shaw intend to oppose it.”
The companies are promising that if their merger is approved, they’ll invest $2.5 billion to build 5G networks across Western Canada over the next five years; and they’ll establish a new $1 billion Rogers Rural and Indigenous Connectivity Fund dedicated to connecting rural, remote and Indigenous communities across Western Canada.