The Competition Bureau has expanded its appeal of the Competition Tribunal’s decision to permit a proposed $20-billion deal between the telecoms, adding two claims of legal error to its initial arguments.
The bureau will face off against Rogers Communications Inc. and Shaw Communications Inc. at the Federal Court of Appeal on Jan. 24, just one week before the takeover deadline of Jan. 31 set by the companies.
The tribunal is a quasi-judicial body that adjudicates cases brought by the bureau, an independent law-enforcement agency that seeks to protect competition in Canada.
The bureau is arguing the tribunal should have first considered the deal just between Rogers and Shaw alone, and then the divestiture of Freedom Mobile to Quebecor Inc., instead of considering the divestiture alongside the original deal. But the tribunal ruled that even if it had analyzed the merger as the bureau wanted, it would have come to the same decision.
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In its updated appeal, filed with court late Friday, the bureau claimed the tribunal did not adequately explain why its decision would be the same, and therefore made a legal error.
It also claimed the tribunal improperly applied the legal test for mergers, as it did not consider the magnitude of service price increases, and failed to consider the duration and scope of the effects of the merger.
In its initial appeal filed Dec. 31, two days after the tribunal released its summary decision, the bureau argued the tribunal made two legal errors: that the tribunal acted outside its jurisdiction by considering the divestiture of Freedom Mobile alongside the original deal, and that the Tribunal did so without the Bureau’s consent.
The Competition Bureau declined to comment on its amended appeal.
In a note to investors, Scotiabank analyst Maher Yaghi said that the additional arguments are unlikely to successfully sway the judge, as the tribunal would not have made assertions about its decision without proper basis.
“Overturning this decision is not easy and hence we continue to believe that closing of the transaction is the most likely outcome,” Mr. Yaghi said.
The bureau is required to file its factum, or written arguments, by Jan. 13, and the companies must file their arguments by Jan. 17.
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