Predatory pricing alleged at Shaw
Vancouver telecom firm Novus files complaint with Competition Bureau
A small, Western-based communications provider has complained to the Competition Bureau that Shaw Communications is selling products below cost to some customers in an attempt to drive its rival out of business.
Novus Entertainment Inc. has filed a formal complaint against Shaw for what it calls predatory pricing practices. Novus sells internet, television and digital phone services to 9,000 customers in the Vancouver metropolitan area.
Since March, Novus claims, Calgary-based Shaw has been targeting its rival's customers with increasingly aggressive offers. The latest round consists of all-encompassing internet, television and phone deals, with each service costing $9.95 per month and the first two months free.
Shaw doesn't offer those prices to all customers but focuses them solely on buildings where Novus has a presence in a clear attempt to drive its smaller competitor out of business, Novus alleges.
"Shaw is abusing its dominant position in the market by offering services — which it normally makes nearly 50 per cent margins on — at a sizable loss as a means to destroy a local competitor," Novus co-president Donna Robertson said Wednesday.
"The millions of existing Shaw customers paying full price should be outraged because they're unwittingly subsidizing the costs that customers with a competitive alternate pay, which is unethical and unfair."
Predatory pricing is prohibited by the federal Competition Act, especially if the seller has a dominant market position, Robertson said.
Shaw has more than 2.1 million customers across Canada.
"We don't know what Shaw's costs are," Robertson said. "But we know that $10 a month is below our costs, so we refuse to believe that Shaw isn't going against fair competition with these offers."
For its part, Shaw acknowledges the offers are available for certain customers, but dismisses the accusation that it's targeting Novus.
"The offers are aimed at any multi-dwelling unit in Vancouver. They're not limited to Novus buildings," Shaw president Peter Bissonnette said in an interview.
Calling it a "very competitive space," Bissonnette said Shaw competes with Novus, Telus and a host of other providers for cable, internet and phone customers, all of whom have different price plans available at different times in an attempt to woo new subscribers.
In the past, Novus has acted in a non-competitive manner by denying other providers access to buildings that Novus has wired with fibre-optic cables, Bissonnette said.
"We'll be responding to this in kind," he said, adding that he's confident the company has done nothing wrong.
In addition to the Competition Bureau complaint, Novus has also filed a writ with the B.C. Supreme Court to stop Shaw's actions.
The Competition Bureau has not revealed whether it believes an investigation is warranted.
"We're quite confident that the info we have sent them is compelling enough for an investigation," Robertson said.