OTTAWA — A three-way deal that would see Rogers buy most of Shaw, and Videotron take over Shaw’s discount Freedom Mobile cellphone business, can go ahead because it’s unlikely to damage competition in Canadian telecom, the Competition Tribunal has ruled. Here’s what you need to know.

What the tribunal found: The deal is “not likely to result in materially higher prices, relative to those that would likely prevail in the absence of the arrangement,” the tribunal said Thursday night in a summary of its decision; nor is the transaction likely to harm “non-price dimensions of competition [such as] service, quality, variety and innovation.”

The Competition Bureau takes cases to the tribunal when it sees what it considers anti-competitive behaviour in Canada, something like a prosecutor.

In this case, the bureau argued that Rogers’s $26-billion acquisition of Calgary-based Shaw would give Rogers too much power in the Western Canadian telecom markets Shaw now serves; that Bell, Telus and a beefed-up Rogers would have more oligopolistic power between them; and that in Videotron’s hands, Freedom Mobile would be too weak to seriously compete.

The tribunal tossed all these arguments. “[T]here will continue to be four strong competitors in the wireless markets in Alberta and British Columbia, namely, Bell, Telus, Rogers and Videotron, just as there is today,” the tribunal found.

Bell and Telus have already been taking “very significant competitive initiatives” to battle for business with a merged Rogers and Shaw, the tribunal said.

And Videotron is “an experienced market disrupter” that can fight with the big kids, it said, pointing to the company’s recent purchase of VMedia; the comparatively small internet provider nevertheless has a national footprint and will help Videotron offer discounted bundles of wireless and wired services in the markets it’s entering with Freedom. 

Who decided this: The Competition Tribunal uses panels of people with combinations of legal and industry expertise. In this case, the panel’s leader was Paul Crampton, the chief justice of the Federal Court. The other two members were Ramaz Samrout, a transportation economist, and Wiktor Askanas, a retired business professor at the University of New Brunswick.

What’s missing: Detailed reasoning. What the tribunal released is a summary of its decision, not the decision itself. Comprehensive reasons are to come “within approximately 48 hours” of the release of the summary. Competition lawyers will have a very special New Year’s Eve.

Rapid reactions: Competition commissioner Matthew Boswell was unhappy. “I am very disappointed that the Tribunal is dismissing our application to block the merger between Rogers and Shaw. We are carefully considering our next steps,” he said in an email.

In a joint statement, Rogers and Shaw pronounced themselves “pleased with the favourable decision from the Competition Tribunal and thank the tribunal members for their work in rendering a swift decision.” 

OpenMedia, a non-profit group that advocates for an affordable and surveillance-free internet, was not. “Today was the last nail in the coffin of telecom affordability in a dismal 2022,” its campaigns director Matt Hatfield said. The Competition Act that the tribunal applies is stacked in favour of monopolies, he said, and needs “deep changes.”

(The federal Liberals are considering some.)

Videotron’s buying VMedia, which the Competition Tribunal treated as a sign of Videotron’s increasing market strength, is part of the problem, OpenMedia argued, especially if you look at it with Bell’s recent acquisitions of Distributel and Ebox, two other small internet companies.

The Competitive Network Operators of Canada (CNOC), which represents similar small internet providers, warned that market power in telecom is continuing to concentrate in the hands of fewer companies. But executive director Geoff White pointed out that the centrality of Videotron to the deal is significant. Other internet companies should be guaranteed the same access to bigger players’ networks as Videotron is getting from Rogers, he said.

What’s next: In theory, Boswell can ask the Federal Court of Appeal to review the tribunal decision, once the bureau has seen the full ruling. Courts are generally reluctant to overrule the findings of specialized bodies in their areas of expertise, but it’s a possibility.

Most likely, though, the next decider is Industry Minister François-Philippe Champagne, who oversees the telecom sector. On Friday, he was non-committal. “We are aware that the Competition Tribunal has decided not to block the merger between Shaw and Rogers, we will review the decision in detail and will have more to say in due course,” his spokesperson Laurie Bouchard said by email.

Under the federal Telecommunications Act, Bouchard said, the minister has authority to approve or reject the transfers of federal wireless licences—the right to use certain segments of radio spectrum for cellphone services—that the Rogers-Shaw-Videotron deals entail.

Champagne has previously set out conditions for the transfers, namely that Videotron must keep the Freedom licences for at least 10 years (not just flip them once the Rogers-Shaw part of the deal is done) and offer prices in Ontario and the Western provinces comparable to the relatively cheap rates it offers in Quebec. Videotron accepted those terms quickly.

The ticking clock: Rogers is borrowing much of the money it needs for the transaction and has already had to extend the financing once because it didn’t get all the approvals it needed on the schedule it expected. That extension cost about $520 million. It expires at the end of 2022 if the deal isn’t “consummated.”

Rogers, Shaw and Videotron all agreed to extend the closing date for their three-way deal until the end of January, suggesting they don’t think everything will be settled before the calendar turns.

The financing terms allow a second extension that will keep the money in place, all the way to the end of 2023, if Rogers pays another round of fees totalling a little less than half the first.