Canada’s approval of major telecoms takeover condemned as ‘dark day’

<span>Photograph: Chris Wattie/Reuters</span>
Photograph: Chris Wattie/Reuters

Canada has approved a major telecoms takeover that would create a media and sports behemoth in an already concentrated media landscape, in a landmark deal that anti-monopoly consumer groups slammed as “a dark day” for competition in Canada.

On Friday the industry minister, François-Philippe Champagne, said he had approved a multibillion-dollar takeover of Shaw by Rogers.

The $20bn deal, first proposed in 2021, combines Canada’s two largest cable television networks. The deal further entrenches Rogers as the country’s second largest cable, telecommunications and entertainment company.

Canadians already pay some of the highest mobile rates in the world, with a Finnish study from 2021 finding that Canada’s prices were largely the result of minimal competition.

Champagne initially blocked the takeover in October as the acquisition would have eliminated Freedom Mobile, Canada’s fourth-largest wireless carrier. As part of the new deal, however, Shaw will sell Freedom Mobile to Quebec-based Videotron for C$2.85bn (US$2.1bn; £1.7bn).

“This transfer follows a series of agreements signed by the parties that will ensure that this new national fourth player will be in it for the long haul, be able to go toe to toe with the big three [telecoms companies], and actually drive down prices across Canada,” Champagne told reporters.

Champagne told reporters on Friday he had secured “unprecedented and legally binding commitments” from the companies, which he would watch like a “hawk”. As part of the approvals, Champagne asked for promises from Rogers to invest in rural internet access and 5G wireless services, and from Videotron to reduce its wireless prices to ensure Freedom’s plans cost 20% less than those offered by the major wireless carriers.

“Should the parties fail to live up to any of their commitments, our government will use every means in our power to enforce the terms on behalf of Canadians,” Champagne said, promising stiff penalties if the companies break their word: C$200m to the Quebec-based Videotron and C$1bn to Rogers.

Rogers, the media and sports giant, was previously consumed by its own internal conflict last year, in what one judge said was “in keeping with a Shakespearean drama”. Many likened the bitter rivalries, power grabs and scorched-earth battles waged through social media to Succession, the hit HBO show about an ultra-rich media familyjockeying for power.

The deal was fiercely opposed by the Competition Bureau, an independent watchdog agency. But the bureau’s opposition was overruled by a tribunal after a month-long hearing, featuring testimony from more than 40 witnesses, sided with Rogers and Shaw.

Consumer groups have remained skeptical of the deal, which they fear will lead to higher prices.

“Today’s decision is the largest blow to telecommunications competition and affordability we’ve ever seen,” Laura Tribe, executive director of OpenMedia, a consumer watchdog group, said in a statement.

“Minister Champagne has turned his back on Canadians, and has crowned Rogers the effective ‘king’ of Canada’s internet – the single largest company in our already overly centralized market.”

Another consumer group, the Public Interest Advocacy Centre, also sharply criticized the deal.

“We do not believe the conditions obtained by the minister can counteract the anti-competitive effects of this merger on Canadians, and will lead to another decade of high wireless prices for Canadians,” said executive director John Lawford, calling the concessions won by the government “smoke and mirrors”.

“The saga of the Rogers-Shaw deal has demonstrated that the telecommunications law, competition law and government of Canada have lost control of a key sector in Canada.”