What the Rogers-Shaw merger battle says about the state of competition in Canada
Digital policy expert Vass Bednar says a merger would limit consumer choice and drive up prices
The battle over the proposed Rogers-Shaw merger reminds digital policy expert Vass Bednar of an old joke: "Canada is just three telecoms in a trench coat."
That idiom refers to the so-called Big Three telecommunications companies — Rogers, Bell and Telus — which together serve about 87 per cent of Canadian wireless subscribers. Rogers will own an even bigger piece of that pie if it succeeds in its plans to acquire rival company Shaw.
The Canadian Radio-television and Telecommunications Commission already approved the $26-billion deal in March, but there's a new wrinkle. Canada's Competition Bureau has filed an application to halt the merger, arguing that it will lead to worse service and higher prices for consumers.
The bureau has filed an injunction to stop the two companies from closing the deal until the Competition Tribunal hears the case. But the bar for quashing the merger will be high, says Bednar, executive director of the Master of Public Policy in Digital Society program at McMaster University.
Here is part of Bednar's conversation with As It Happens guest host Helen Mann.
Why is this merger with Shaw so important for Rogers?
It's important for Rogers because the company can solve for some gaps in their offering in terms of the geography, their penetration or their coverage across Canada. And they can find some efficiencies.
So that is great for their shareholders, but has implications for workers of the two firms and also, of course, for consumers.
The Competition Bureau weighed in a few days ago saying that if this goes through, it will hurt the consumer. Explain to us how consumers will pay the price for this.
You hit right on one aspect: Price.
So because there will be limited choice for consumers, there are price implications. And I think we're seeing people are maybe more price sensitive than ever before in this period of inflation.
But there's also implications for choice overall. So because we see so much consolidation in the sector, if there's only two or three options, it doesn't necessarily mean that there is enough competition to actually drive down prices and kind of achieve the true choice that we expect consumers to have when they're in a marketplace.
Why has it taken so long for the Competition Bureau to weigh in on this when it was announced over a year ago?
We have a high evidentiary burden when you bring a case forward to challenge a merger like this, which is good. It means that the bureau has been doing a ton of homework, a ton of econometric analysis, and really rationalizing and quantifying, almost, the harms — harms to consumers, harms to competition — of this. And that takes time, frankly.
So machinations might be going on behind the scenes, concerns might be being raised, but we're not aware of them.
Absolutely. It's not like someone missed an email in their inbox.
All policy, in ways big and small, is political. And I think we might have underestimated the role of consumers, the role of everyday people. Forget just public opinion, but I think a lot of people have felt that there was something off about the merger, that the merger wouldn't actually be beneficial to them, and it's hard to articulate the benefit to consumers.
But again, the benefit to consumers is not what Rogers and Shaw primarily have to do with this merger. They put other stakeholders ahead of everyday people.
Well, if the concerns of consumers mattered, you'd think something would have happened sooner. Because Canadians have been complaining for years about the high costs of wireless in this country. You see these ads from across the border and it's astonishing how much cheaper things are. How much worse can things get when it comes to the cost for consumers?
I don't have a number for you there.
Of course, our geography is often cited as a reason for [our high prices], and our population — how our population is spread across Canada, our density.
And to that, I think it's really interesting to note from a couple of days ago, the Quebec government announcing a partnership with [Elon Musk's satellite internet service] StarLink, which is not a Canadian company. I only bring this up because there aren't implications for StarLink with Rogers-Shaw, but it is an area where we see governments making an investment in a company that is not Canadian, that is going to be helping with broadband.
So in the telecommunications landscape, I think our national attitudes towards competition might be changing.
So when it comes to making the final decision about whether this goes through — and, ultimately, in improving the situation for Canadian consumers — who plays that role? Who makes the decision? Is it courts? Is it the CRTC? Or the federal government?
If the case is heard by the Competition Tribunal, it will be the tribunal.
If public opinion — consumer opinion and also shareholder desires — change now that it's being challenged, we might see one of the merging parties make a different decision. We might see somebody like [Rogers chairman] Ed Rogers.
You know, I just mentioned StarLink and Elon Musk, and we're having really important conversations about the power that Elon has or will have over the kind of digital sphere with his newfound ownership of Twitter. I think a parallel conversation is with Ed Rogers and his power over telecommunications in Canada — his potential power, as the primary shareholder of Rogers, and the way that governance is structured, and the way he can vote, and the power that he'll have in our country.
It's going to be a very exciting case to watch that will illuminate, I think, the strengths, but also the deficiencies, of Canadian competition law as it currently exists.- Vass Bednar, McMaster University- Vass Bednar, McMaster University
It does look like both Shaw and Rogers are aware this [merger] could have been problematic, because ... they've tried to sell off part of Shaw's cellphone network [Freedom] ... so it looks less like it's a monopoly.
Yes. And many anticipated that that would be a suitable remedy for the bureau, that they would feel satisfied that that action had lessened the implications for competition overall. But as we see from the bureau coming forward, that wasn't convincing to them.
So in your view, how likely is it that this $26-billion deal goes through?
It still feels like a coin flip. But it's going to be a very exciting case to watch that will illuminate, I think, the strengths but also the deficiencies of Canadian competition law as it currently exists.
Written by Sheena Goodyear with files from CBC News. Interview produced by Paul MacInnis. Q&A has been edited for length and clarity.