It’s time to move on from the Rogers-Shaw merger and get on with the review of competition law.

University of Ottawa law professor Jennifer Quaid before the House Committee on Innovation and Technology, January 25, 2023

January 28, 2023

The story of the Rogers-Shaw merger is all but over as we await Innovation Minister François-Philippe Champagne’s final approval.

The Minister’s latest messaging semaphore was that he is in no hurry to put the merger to bed by authorizing the transfer of radio-spectrum licences from Shaw to Rogers and Vidéotron.

But that’s just politics. The likelihood of the Minister vetoing the court-approved merger to seek a new ownership configuration is remote.

For those who didn’t follow last week’s rapid-fire developments, here are the highlights:

• On January 19th the country’s leading wholesale-based telco TekSavvy filed a CRTC complaint designed to overturn the merger apple cart by targeting the wholesale Internet rates afforded by Rogers to Vidéotron in British Columbia and Alberta. TekSavvy says that arrangement is a sweetheart deal and violates CRTC rules prohibiting telcos like Rogers showing “undue preference” to some but not all wholesale based providers.

• As expected by all but the faithful, on Tuesday afternoon the Competition Commissioner Matthew Boswell lost his federal court appeal of the Competition Tribunal’s ruling that the merger was not anti-competitive. Indeed the Tribunal had found as a legal fact that the long term commercial arrangements between Rogers and Vidéotron on wholesale rates and network sharing would enhance competition.

The Commissioner’s case was so weak that the Court told lawyers for Rogers, Shaw and Vidéotron that they didn’t have to address the court. Justice David Stratas told the Commissioner his case “wasn’t even close.”

• On Tuesday evening the Commissioner announced in a press release that he was still right but would not appeal to the Supreme Court of Canada.

It was at this point that the terms of political engagement took shape for the fifth and final Act of the merger drama.

• On Wednesday morning MPs met in the House of Commons Innovation & Technology (INDU) committee to question representatives from all of the telcos as well as several university academics opposed to the deal.

It was a slag fest of cross-insults between telcos and campaign-style outrage from MPs.

The most effective attack on the deal came from Conservative MP Ryan Williams who wanted to know “why Rogers got to pick its fourth competitor” in Vidéotron.

Liberal MP Nathaniel Erskine-Smith joined in, asking if anyone had a good answer to why Shaw would choose to take a billion dollars less from Vidéotron to sell Freedom Mobile than the $3.75 billion offered by Anthony Lacavera of Globalive.

Lacavera (and others) have called on Champagne to block Shaw’s sale of Freedom to Vidéotron and then conduct a government-supervised auction. The latter option would require an Act of Parliament.

If at any point the inconsolable opponents of the merger are prepared to stand down the populist politics long enough to consider lessons on reforming competition laws, Professor Jennifer Quaid of the University of Ottawa had some advice for INDU MPs.

First, she appeared to suggest that Rogers and Shaw may have gamed the Competition Bureau’s vetting protocol by holding back its best mitigation proposal (the deal with Vidéotron) with all of the detailed information required for the Bureau’s econometric analysis until after the Bureau decided to reject the merger.

If that’s what Rogers did with strategic intent, it’s not possible to put that allegation to the test without a great deal of insider knowledge, some of which is legally confidential.

But Quaid offered an important overall point: we have a public interest in making sure merger applicants don’t play tactical games with the Bureau.

The other point is the obvious gap between the policy assumptions underpinning current competition law and the public skepticism about its outcomes.

Although Quaid (as a critic of the deal) doesn’t say so, part of this gap must surely be attributed to the populist criticism of the merger. Most of that criticism is that the merger is self-evidently terrible, anti-competitive and supported only by vested interests “and the business press.”

Perhaps that deep skepticism is to be expected: the north star of Canada’s competition law resides in the statute’s purpose clause which elevates market-driven efficiency to the exclusion of any other considerations.

That ought to produce a pro-consumer outcome every time, but much of popular opinion doesn’t view consumer interests and corporate consolidation as compatible, ever.

The skepticism may also be explained by a disconnect between a statute administered as it was envisioned and on the other hand popular suspicions that competition law is a pro-business regime designed for and by the Bay Street establishment and then policed by the same elite.

Quaid alluded to this state of affairs in a couple of different ways:

My second of two points… is on the Tribunal process…I think it’s a heavy process. It’s like a court. Yet it’s packaged as an expert entity. I urge you to look at the kinds of expertise that is generally used in the Tribunal and whether or not you think that captures the full public interest that might bear on competition matters. For the most part, the expertise is business and economics. The question is, are there other perspectives relevant to the competition questions that come up that we should perhaps ensure are better represented in the Tribunal?

…

I’m one of those people who believes there is a place for regulation and direction. ... If you rely simply on the wealth maximizing incentives of private actors—and they are perfectly entitled to organize their affairs in that way—you may not get the outcomes you want from a public policy perspective…

And finally and wisely (forgiving the clunky Google translation):

I think it is the duty of this government and…parliamentarians to listen to citizens, without polish, without labels, without packaging, all beautiful, etc. However, we cannot completely disregard the popular reaction that is happening either because I think that the citizens are not always well equipped to know how to organize their opposition. In this regard, I am lenient because I think there’s a real desire and a real frustration coming out. Rightly or wrongly, I won’t start saying who is right or wrong. However, I think it is clear that there is a gap between the popular understanding of the impacts of this transaction and economic and legal understandings of it. I think it is necessary that there be a communication between the two if we don’t want to have a revolt in relation to the process.

Connecting the dots between those comments, Quaid suggests that if the public thinks there is something badly wrong about competition law outcomes, we had better revisit its overall mission.

Alternatively, it may be that there is nothing fundamentally wrong with our competition law and it only needs stronger enforcement tools. That has been the view of many, including the Competition Commissioner. Some of these changes were made in last summer’s amendments to the Act.

Either way, the federal government’s public consultation window on competition reform remains open until February 27th. The background paper is available here.

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Also from MediaPolicy.ca: Will Big Tech be cut down to size? What’s next for competition law – February 3, 2022

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