Industry Committee on Jan. 25th, 2023

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

On mobile rates, the Competition Bureau's experts found that even with the sale of Freedom to Videotron, prices for Shaw Mobile, Rogers and Fido would increase in the range of 12% to 14%. The tribunal found in paragraph 246 that even if you adjust these price increases to reflect Rogers' arguments—I'm assuming you're the one who wrote them as their representative—prices will still go up.

What should my constituents and Canadians across this country be expecting from this merger? Should they expect higher Internet prices and higher cellphone prices?

[Dr. Bryan Keating]

As an example, I think it's undisputed that the incentives for Freedom's prices are to go down. I think the model of the bureau's own expert, Professor Miller, whom I talked about before, showed that Freedom's prices would go down. Our analysis found the same thing, so it is true that different plans will have different movements and prices.

I can't speak to the exact magnitudes, but there is a clear incentive for the transaction to put downward pressure on prices because there is no diminution of competition, and you get clear benefits from reallocating Shaw's assets, as I talked about before.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

As a representative of Rogers, going back to the $6 billion, what guarantees will be provided to my constituents that those investments will actually be made? This is the difference of running a business and having access to education for my constituents. Why should my constituents trust Rogers and Shaw?

[Dr. Bryan Keating]

Again, you will have Rogers witnesses here this afternoon. You should talk to them about their specific plans and commitments.

All I can say, from an economic point of view, is competition will increase as a result of this transaction. That creates incentives for Rogers to continue to invest in its network, just like Bell, Telus and Videotron will have to do.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you.

Professor Bednar, with my remaining time, I'll note that Shaw has a weak record of developing the spectrum that it has acquired in B.C. and Alberta. Do you feel this merger will improve the development of these essential infrastructure projects that everyone relies upon?

[Vass Bednar]

I think that's difficult to speculate on. However, what I appreciate about this moment is that we have more eyes on the street than ever before when it comes to this merger in Canada and more of a watchdog function coming from everyday people, and there's great interest in the data that's shared through Statistics Canada and ISED on costs and how these decisions materially impact people.

I'm sorry I can't be more helpful.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you.

Professor Quaid, do you—

[The Chair, Liberal, Joël Lightbound]

Mr. Vis, I'm sorry, but that's time. We're over the five minutes. Thank you.

[Brad Vis, Conservative, Mission—Matsqui—Fraser Canyon, BC]

Thank you, Mr. Chair.

[The Chair, Liberal, Joël Lightbound]

We'll now turn to MP Erskine-Smith for five minutes.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Thanks, Joël.

Professor Quaid, I want to start with you because you expressed some discomfort with the minister relying upon his discretion under the spectrum licence transfer regime to affect an outcome related to competition. What's your comfort level with allowing the largest merger in Canadian history to proceed under outdated legislation?

[Dr. Jennifer Quaid]

Listen, that's a big question to answer. It's a bit hard for me to do that because I didn't listen to all the evidence of the tribunal. I didn't see how the witnesses came across and so on. Whether we like it or not, the tribunal made the assessment of the evidence they did and they came to the conclusions they did. I guess I worry about—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Pause there, because the question they were answering was whether the deal is likely to substantially lessen competition. I am entirely uninterested in that question. The question I'm interested in answering is whether this is good for competition in Canada. We have a heavily concentrated oligopoly. Rather than moving the pieces around within that oligopoly, it strikes me that we should be breaking it up and adding competition at every opportunity we can.

We have an opportunity. You say it's a political decision, but the political decision is this: Can we improve competition in telecommunications and reduce prices for Canadians at the same time? The Competition Tribunal can answer their question related to the Competition Act. The Federal Court of Appeal can uphold that decision. I don't see why we should be bound by anything related to those questions when they're the wrong questions.

[Dr. Jennifer Quaid]

That's fair enough. I think that's the role of the consultation process. As legislators, you absolutely have the power—and I think this is the right way to look at it—to look at the state of the rules and propose changes, and I forcefully encourage you to do so. I believe there are problems with the merger review provision, but I worry about using this discretionary decision as a workaround while we wait to make real changes to the law.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Yes—whereas I might see it as a way of actually addressing the fact that the law is so broken to begin with.

Let's talk about the conditions the minister might impose. The minister has laid out two conditions. The minister could impose additional conditions, and the minister probably should impose additional conditions, but let's look at the two conditions the minister has currently proposed. One is related to the duration of time that Videotron would have to maintain the licence. It's a 10-year period of time. Is that enforceable in any way whatsoever?

[Dr. Jennifer Quaid]

It's enforceable to the extent that a 10-year period of time is something we can watch. We can watch the elapsing of time and can observe whether or not it's being held. Yes, you can, but—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Then we can say, “Oh, no. They didn't do the thing we said they should do.”

[Dr. Jennifer Quaid]

Yes, basically. I mean, there isn't a way.... You can't go to court and say, “You didn't follow my conditions.” I don't know who would enforce that, so—

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That strikes me as a problem.

[Dr. Jennifer Quaid]

—it would be reputational.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

Yes, and that's worked in the past.

Related to that is a question that colleagues of mine have asked. I think it's a question that's well directed to you. In an ordinary situation related to remedy, the Competition Bureau could be heavily involved in the remedy and say that it's going to spin off Freedom Mobile and have comfort in who the recipient of Freedom Mobile ultimately is. Mr. Keating is comfortable. He obviously has a particular client, and he's put a lot of work into suggesting that there's going to be strong competition as a result of this deal in the hands of Videotron.

The Competition Bureau is certainly not comfortable with that. Why should we as Canadians be comfortable if the Competition Bureau is not? Why should we be comfortable with the idea that the first player in an oligopoly is ultimately, in this particular instance, deciding who the fourth player in the oligopoly will be?

[Dr. Jennifer Quaid]

That's a really hard question to answer, I think, in the sense that you would need to look at what substantiates the belief. The bureau obviously has the evidence that they think supports that question. One of the things you may want to ask about is this: Just because there is the capacity to lower prices, or the belief that you will, that isn't necessarily enough. Will those price decreases actually occur? Creating the capacity for competition to happen may not be enough. The classical belief is that you create the conditions and they should naturally occur, but I think we observe that sometimes that isn't the case.

I think the larger question about concentration in telecommunications will require more than just saying we want to change the competition rules, honestly. I think there are characteristics to the telecommunications industry and to why this industry is concentrated that bear some analysis, but I don't think it's beyond.... Absolutely, this is your job as an MP. It's what legislators should do: “We don't like it, and we're going to come up with a solution.” That's certainly the case. It's just that it's not going to be a legal decision; it's going to be a political decision. However, we've made political decisions about mergers before. We said no bank mergers.

[Nathaniel Erskine-Smith, Liberal, Beaches—East York, ON]

That's understood, and from a political perspective—as I run out of time—I think it's hard to imagine that Rogers would accept a deal taking much less money if it were going to mean the most competition against Rogers. It just boggles the mind.

Anyway, thanks for the time. I appreciate it.

[The Chair, Liberal, Joël Lightbound]

Thank you, Nate.

We'll now turn to Mr. Lemire for two and a half minutes.

[Sébastien Lemire, Bloc, Abitibi—Témiscamingue, QC]

Thank you, Mr. Chair.

Mr. Keating, can you tell us what kind of company Globalive is? How would you qualify its actions in the context of the current proposal?

How did it behave with Freedom Mobile's predecessor Wind Mobile, founded by Mr. Lacavera?