Shaw Communications Inc.’s assertion that its wireless business was not profitable “doesn’t stand up to scrutiny,” a lawyer for the Competition Bureau told a hearing into Shaw’s proposed $26-billion merger with Rogers Communications Inc.
Lawyers for the Competition Bureau made their closing arguments in front of the Competition Tribunal on Tuesday, wrapping up a case that has spanned four weeks and included evidence from 45 witnesses.
The Competition Bureau is asking the tribunal to block the merger of Canada’s two largest cable companies. The watchdog argues that the deal, which would see Quebecor Inc.’s Videotron Ltd. acquire Shaw’s Freedom Mobile, would leave Canada’s fourth-largest wireless carrier severely weakened.
The Competition Bureau has positioned Shaw’s Freedom Mobile as a “maverick” competitor responsible for driving down cellphone bills. However, Shaw executives have testified that the carrier, which serves 1.7 million customers in Ontario, Alberta and B.C., has not generated any free cash flow, and that Shaw has yet to recoup the $4.5-billion it has invested in wireless since 2016.
Rogers and Shaw assert that Freedom Mobile would be a stronger competitor in Videotron’s hands.
Alexander Gay, one of the lawyers representing the Competition Bureau, said assertions made by Shaw executives during the hearings are not supported by the numbers. For instance, Shaw’s claim that Freedom Mobile was not generating free cash flow is based on a skewed definition of the metric that isn’t used in any of the company’s financial reporting, Mr. Gay argued.
“Beware of the hollow statements and stick to the facts,” he advised the tribunal, later adding that “numbers don’t lie.”
The tribunal is aiming to release a decision by the end of the year if possible. However, Federal Court Chief Justice Paul Crampton, who is overseeing the hearings, said on Tuesday that it may be challenging to do so, in part because of ongoing disagreements between the two sides over issues such as market definitions.
“We’ve got less than 10 days between now and Christmas,” Justice Crampton said. “So anything the respondents can do to help facilitate our attempt to write up a decision before the end of the year, if we can otherwise reach one, would be greatly appreciated.”
Rogers and Shaw have raised concerns that the deal could fall apart if it doesn’t close by Jan. 31. Additionally, Rogers will have to pay millions to its bondholders to extend its deadline with Shaw past the end of this year.
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