Industry Committee on Jan. 25th, 2023

[Brian Masse, NDP, Windsor West, ON]

Thank you, Mr. Chair.

Here we are, after Bell acquired MTS, Telus bought Public Mobile, Rogers bought Fido and Shaw bought Wind Mobile, and now we're going to have Distributel and Bell in a merger as well. I'm not sure if this qualifies for the definition of insanity, which is doing the same thing over and over again, but it certainly isn't a pattern of increasing competition.

Ms. Pratt, one of the reasons I've been concerned with the way we're doing the spectrum auction is.... I'll give you a good example. One is Quebecor, which had a carve-out and bought spectrum for rural areas of Ontario, Alberta and B.C., later sat on it and finally sold it for a profit of $331 million.

My question to you is this. With spectrum policies like this and the way they've evolved, is that good or bad for consumers and competition? I'm failing to see how the way we've been rolling out the spectrum improves competition. I wonder if you have an opinion on that.

[Jeanne Pratt]

We look at each particular transaction under our framework and evaluate each particular transaction under that framework. Spectrum is one of the assets used in competition in these markets, but ours is a much more holistic examination of market dynamics and the impact of a particular merger and any anti-competitive effects we think will emanate from that merger.

Spectrum is a fact in our investigation. It's not something that I have an opinion on.

[Brian Masse, NDP, Windsor West, ON]

Okay, but would it lower or incidentally increase competition? If we do more spectrum and we allow people or companies to sit on it, resell it for higher profits and then pass those costs onto consumers, is that model for competition seen as advantageous? Would it potentially be better for us to have more stringent spectrum policies so that spectrum is rolled out with competition and faster, and also on the basis of what they originally got the spectrum for?

[Jeanne Pratt]

I'll defer to my colleague Mr. Durocher. I'm a one-trick pony: I look at particular merger transactions.

[Brian Masse, NDP, Windsor West, ON]

You're a bit more than that.

[Anthony Durocher, Deputy Commissioner, Competition Promotion Branch, Competition Bureau]

Thank you for the question.

For every spectrum acquisition and how it's used, I think the impact on competition would be specific to the facts of a given case.

I think more broadly, outside of merger review, the Competition Bureau also has an advocacy mandate, whereby we work with regulators to try to promote regulations and rules to try to enhance competition in the economy. Certainly, in the telecom sector, that's an area where we've been very present with the CRTC to try to favour pro-competitive recommendations, and our intention is to continue in that vein.

[Brian Masse, NDP, Windsor West, ON]

Okay.

Very quickly, do the laws of the Competition Bureau currently satisfy your capabilities to deal with the market and what you have to do for competition in Canada, or do they need to be modernized or reflective of those of our trading partners?

Thank you, Mr. Chair.

[Anthony Durocher]

I think we've been very vocal and our commissioner has been vocal in saying it is important to review and thoroughly modernize the Competition Act. It is very encouraging that this process has started. Initial amendments took effect in June of last year, and the minister has launched a broad consultation to hear from Canadians about how Canada's competition laws can be improved.

The process that has been started is a very important process. Certainly, the Competition Bureau is very intent on participating in the process and sharing our views on where specific gaps in the legislation can be improved. We are planning to publish our submission in due course with respect to that process, including with respect to our merger review framework.

[The Chair, Liberal, Joël Lightbound]

Mr. Durocher, Ms. Pratt, Mr. Dagenais and Mr. Schaan, thank you for being with us in the first hour of the meeting on this subject.

Without further ado, I'm going to suspend the meeting briefly to give our next witnesses a chance to get settled.

The meeting is suspended.

[The Chair, Liberal, Joël Lightbound]

Welcome again, colleagues.

We'll now begin the second hour of testimony and questions.

In this second hour, we have appearing as an individual Jennifer Quaid, associate professor and vice-dean of research with the Civil Law Section of the Faculty of Law at the University of Ottawa. She is here, in Ottawa.

We also have with us Vass Bednar, executive director of the master of public policy in digital society program at McMaster University. She is joining us by videoconference.

We also have with us Keldon Bester, co-founder of the Canadian Anti-Monopoly Project, as well as Bryan Keating, executive vice-president of Compass Lexecon.

I'd like to thank all the witnesses for their participation.

Without further ado, Ms. Bednar, you have the floor for five minutes.

[Vass Bednar, Executive Director, Master of Public Policy in Digital Society Program, McMaster University, As an Individual]

Good afternoon, esteemed members of the Standing Committee on Industry and Technology, my fellow witnesses and all members of the public who may be tuning in.

As you heard, my name is Vass Bednar. I'm the executive director of McMaster University's MPP in digital society program. I'm a fellow with the Public Policy Forum and a senior fellow at CIGI. I also write the newsletter “regs to riches”. While I'm neither a lawyer nor an economist, and I'm happy to defer to colleagues with richer expertise on more technical or legal questions, I am one of the voices that help broker a bigger picture in the context of competition for Canadians.

I wonder what I can offer you today regarding the now almost soap-operatic Rogers-Shaw merger that you don't already know. For the average person, this process has become more than muddled. We've seen social media chatter conflate the decision of the tribunal with the ambition of the bureau, but that's not insurmountable. That said, this is the largest merger in Canadian telecom history. It affects millions of Canadians and the essential services they receive.

One reflection I have that I think is worth sharing is with regard to the thousands of Canadians—we heard 7,800—who took time to make their voices heard in this process, albeit maybe somewhat misdirected at the tribunal. I wonder if this occurred because there was no formal mode for the public's view to be properly consulted as a complement to policy procedures. You could argue that the minister has a public duty to engage more fulsomely with Canadians regarding this merger and its dynamics, step by step, especially regarding expectations and accountabilities for when it moves forward. This has not quite been done. As a result, the people's appetite to engage on the question has not had an appropriate outlet.

To whom or to what should the people who wrote in, and who care to follow the ups and downs of this soap-operatic but very important and exciting merger, look for accountability? What mechanisms do they or we have to hold Rogers and Shaw and others to account for the claims they have made, or to hold Quebecor to account to deliver what they have promised or what people expect from a wireless carrier? Even the somewhat gratuitous promises that Videotron has notionally made are unenforceable. We heard that earlier as well. Furthermore, Videotron has made no promises, however weak, on protecting jobs, on rural or indigenous connectivity and on R and D investment. What does that mean for western Canada?

We have this opportunity in Canada, with an energized and engaged public that is legitimately interested in improving competition outcomes in Canada and understanding our history of corporate consolidation, and that is fed up—we know that—with what they pay for wireless and Internet services. Competition is a topic that's been the subject of countless CBC Radio segments, a Marketplace investigation, various opinion editorials from The Globe and Mail's editorial board, a Canadaland radio series and near endless memes.

Yes, people care deeply about the outcome of this proposed merger. If rates later grow or get jacked up, what is their recourse? Perhaps you've received letters asking you the same question.

At this time, I suppose I would encourage all parties to consider complementary policy interventions that can collide with the current consultation on the future of competition policy in Canada. Keep in mind that this is a very technical and abstract question for most people. Even simple interventions can be powerful here, such as labelling flanker brands, as they do in the U.S., to help people understand that context of competition. We need radical incrementalism for competition in Canada and an all-of-government approach, not one narrow window of opportunity in a politically delicate context as a consolation prize.

Some have called for more public competition in telecommunications moving forward. Perhaps we also need to look ahead to the benefits of a publicly owned cloud, or have a conversation about whether we will have or need a strong Canadian competitor in the low-earth orbit satellite space as Telesat teeters on the verge of bankruptcy. Perhaps matters that intersect with competition and telecommunications should also be considered by the CRTC. Why doesn't it have jurisdiction here except over broadcasting? Also, day-to-day competition law could be made more open.

Finally, of course this merger is a historic hinge for Canada to take competition more seriously and to be a better broker of these processes. I'm super glad we're talking about it today, even though it sort of feels like a post-mortem.

So what's next?

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

Professor Quaid, the floor is yours.

[Dr. Jennifer Quaid, Associate Professor and Vice-Dean Research, Civil Law Section, Faculty of Law, University of Ottawa, As an Individual]

Thank you, Mr. Chair.

Honourable members of the committee, I'm pleased to be with you today. My name is Jennifer Quaid, and I am an associate professor and vice-dean of research of the Civil Law Section of the Faculty of Law at the University of Ottawa.

This isn't the first time I've appeared before the committee. I'm pleased to once again address issues related to competition law and our competition policy in the context of what has transpired in the evaluation of the Shaw/Rogers transaction.

I've read the decisions, which I have right here with me—it's a habit I've developed as a lawyer. I don't really intend to discuss the content of the decisions, unless you have specific questions, because the decision has been rendered.

I think one of the current discomforts is that there is the public perception and many people's perception—the Competition Bureau has also given its opinion—and we disagree with the assessment of the tribunal's evidence and the legal issues at the Federal Court of Appeal. However, in law, once the tribunal has ruled, what it has found becomes the truth. We may disagree with the tribunal's decision, but the tribunal explains very clearly and in detail why and how it reached its conclusions. We can disagree, but personally, I am much more interested in the future and how we should respond.

These are the elements I'll address today.

I'm going to make three points, and I will try to make them as briefly as possible. I know I have a reputation for being long-winded. That's the professor in me. I'm happy to talk about other things as well.

The first thing I want to talk about is what the context and what happened with Rogers-Shaw should make us think about in terms of the process of reviewing mergers in Canada. I'd like to explain that a bit.

Second, I think what happened in this case is a bit of a wake-up call in terms of what kind of decision-making body we need for competition. There's been long-standing discussion about whether we have the right model and whether the tribunal.... This is without taking anything away from the devoted and very serious work that the people who have been part of the tribunal have done. I'm taking nothing away from that. I think it's time to reconsider whether we have the right decision-making body.

Third, I think there is a serious question here—particularly in the context of Rogers-Shaw but not exclusively to that—when we have competition interacting with a regulated sphere, and we need to think about some coherence between these different arms of government. In this case, others who know far more about telecommunications than I do.... I am not a telecom expert and I will say that right now, although you're going to hear from one this afternoon: Ben Klass. There is concern that these two parts of the administration are not talking to each other. They're not working well. I think that should concern you.

Coming back to my first point, what does Rogers-Shaw mean for merger review? I'm not going to give you a 101 on merger review, unless you really want it. We have to understand that in Canada, we don't approve mergers, by and large. We have a process by which mergers are notified to the bureau through the pre-notification process if they are of a certain size or if the parties are of a certain size. There are some transactions that fall below that threshold.

Many transactions are notified to the bureau. Most of the time, the bureau will look at them and say, “We don't see any problems. You can proceed.” However, it's not an approval. They're saying, “We won't object.” Sometimes it gets a little sticky and we have to go a little further along in the process. Perhaps the bureau says, “You know what? We need more information.” They might issue what's called a supplementary information request, or an SIR. The idea there is that they need to understand more. That's often a signal that there are deeper concerns.

It's really important to remember this when we start talking about what happened with Rogers-Shaw and the proposal of the remedy later in the game. All the way through this pre-notification process, there's an opportunity to come to a resolution, and that's what happens most of the time. This resolution is obviously agreed to by both sides. Once again, it's the bureau saying, “We're satisfied, and the way things have been changed and the things you're going to do”—whatever that might be, like divestitures or undertakings—“are good enough that we're not going to object.” Ultimately, though, a small number of cases—and it really is a small number—get contested before the tribunal. It's important to reiterate this, because it gets said so many times incorrectly in the press.

The tribunal does not approve mergers. The tribunal hears an application from the commissioner that says they have concerns about this merger and believe these concerns can be addressed by an order from the tribunal. This is a request for an order to resolve serious competition concerns. They have to reach a threshold of being substantial, and that is how this process before the tribunal starts.

Without getting into a lot of detail, what is significant and I think important to keep in mind with respect to why there was such a dust-up over whether we looked at the original transaction or we looked at the transaction as modified is that proposing a remedy in the context of the contested proceeding is not something that's happened before, so it is a new question. The tribunal didn't see a problem with it and said that, at the end of the day, the burden of proof didn't really matter. They thought the evidence was there anyway. But it was an altering of the normal way things are done. I think for the future we need to think about whether that's actually what we want to do.

I will tell you what my concerns are, and I'm happy to discuss them in greater detail.

The first is that we are now creating an incentive to wait to propose remedies until things are further along. That matters from a public-interest perspective because the commissioner doesn't invent a section 92 application overnight. That takes months of preparation. In this case, factually, there was no deal with Videotron on the table until June. They did get documents at that time, and then they got the full documents in August.

I think you need to remember that the level of detail—and if you have looked at the tribunal decision you will know—required to prove anti-competitive effect requires serious econometric analysis and lots of information. If you just have the idea that there's a deal out there, that's not enough for the commissioner to prepare a case. They are going to be required to prove things with detailed evidence. You need to know what the numbers are in that remedy. You need to know the conditions of the transaction to assess its impact. When it comes late in the game, that is difficult.

I will be clear about this. As a factual matter, the tribunal said there was no prejudice in this case. The commissioner didn't suffer any harm. I think we have to be careful about how much we expect public enforcers to just twist on a dime, but I think that's part of the reason they didn't go further with it.

I will say that the Federal Court of Appeal does recognize it's possible that proposed remedies coming after a challenge is filed could be a source of abuse or could be problematic, but they don't want to explore the conditions of that right now because there wasn't really a live case before them. They didn't think it was going to make any difference in this case. That's fair enough, but I think for the future we shouldn't just be passive about this and say we will leave this Rogers decision like this. What are the conditions under which we would be willing to say we're comfortable that deals can be changed and that maybe considering the remedy right into the merger is acceptable?

I have some reservations and I will tell you why. It's a feature of our corporate law and it's a feature of our economic system here that companies don't have to consider the public interest. They are not obliged to do that. They are absolutely entitled and free to consider their profit maximization self-interest. In that context, we need to be a bit careful about saying we're just going to allow unilaterally proposed remedies to be baked in and we will analyze them. I'll put that to you.

My next two points I'm going to say very quickly. They are on the tribunal process. I can't remember if I have said this already, but 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 are generally used in the tribunal and at whether or not you think that captures the full public interest that might bear on competition matters.

For the most part, the expertise is in business and economics. The question is whether there are other perspectives relevant to the competition questions that come up that we should perhaps ensure are better represented in the tribunal. Honestly, when they talked about accelerating the process and the tribunal had an expedited process.... I'm going to give you a metaphor. Imagine an elephant running. The process of the tribunal is heavy. There are limits to how much you can accelerate a court process, so let's examine some other models that are faster.

Finally—and this is really a very short point on regulatory coherence—I think that as we look at competition reform, we should consider how competition relates to other areas of regulation. In this case—and I am not an expert and I defer to those who are—it is clear that there are some cross-purposes happening here between telecommunication regulation and competition regulation, and I think that should concern you.

I'm going to stop here. I'll be happy to answer your questions.

I can respond in French as well, if you prefer.

Thank you.

[The Chair, Liberal, Joël Lightbound]

Thank you, Professor Quaid, and welcome back to the committee. Your perspective is always very interesting. In fact, I forgot the time. I'll be much less lenient with my colleagues than I've been with you, Professor, because it was so interesting.

We'll now turn to Mr. Bester for five minutes.

[Keldon Bester, Co-Founder, Canadian Anti-Monopoly Project]

Thank you so much to the committee for inviting me to speak on this important topic.

My name is Keldon Bester. I am a co-founder of the Canadian Anti-Monopoly Project and a fellow at the Centre for International Governance Innovation. In the past, I worked as a special adviser at the Competition Bureau and as a fellow at the Open Markets Institute in the United States.

I want to be upfront that Globalive Capital, which has an interest in blocking this transaction and which you will be hearing from later today, is a financial supporter of CAMP. We maintain strict editorial independence in our policy positions.

I would like to start by returning to the conclusions of this committee back in March 2022. They are conclusions that I feel remain relevant today. This committee correctly determined that the Rogers-Shaw transaction should not proceed, but that if it did, the government should use any tools it has to hold the parties accountable for their promises to Canadians. This committee also noted that the law that made this merger possible—the Competition Act—should be reviewed immediately.

As for the situation today and where we might go from here, I would like to stress three points.

First, while it is entirely possible that Videotron replicates its competitive performance in Quebec and eastern Ontario, we should set the bar higher than the competitive outcomes currently present in Quebec. The government should direct the CRTC to monitor whether Videotron makes good on its aspirations to be a disruptive competitor.

Second, if we do not use the ongoing review of the Competition Act to reform Canada's weak merger laws, we should expect to find ourselves in the same situation, if not a more extreme situation, in the near future as corporations continue to use mergers and acquisitions as a way to reduce competition and entrench their dominance. Two changes to this effect could be the presumption of illegality of mergers by dominant or jointly dominant corporations and acquisitions thereof, and an explicit preference for outright blocks, which the commissioner pursued, rather than risky behavioural or structural remedies.

Finally, Canada's telecom policy framework cannot remain stagnant as the market undergoes this kind of structural change. The government should act on the proposed policy direction for the CRTC and direct it to review its framework for supporting wireless competition in light of this transaction, including the consideration of a full mobile virtual network operator—or MVNO—model.

Because of the approach taken by the merging parties and accepted by the Competition Tribunal, Canadians have limited options to hold the merging parties accountable for maintaining competition in Canada's wireless market. All that remains now is the minister's approval of the transfer of spectrum assets and the conditions he attaches to that transfer.

Following the release of the tribunal's decision in late December, CAMP wrote that the minister has the opportunity to strengthen the conditions he laid out in his October statement. These could include more aggressive pricing benchmarks based on international peers, a timeline for reaching those benchmarks and the consequences for not doing so, which could include the introduction of an MVNO model.

Entrepreneurs who build successful companies are entitled to the rewards of their hard work, but those rewards should not come at the cost of competitive markets for Canadians. The end point of a system that puts so much emphasis on getting mergers through is the further monopolization of markets that are critical to Canadians, reducing competition when we should be increasing it.

One role of effective competition policy is to close off exit options that reinforce the monopoly power of incumbent corporations. Concentration only leads to more concentration. An effective competition law, a well-resourced enforcer and the vigilance of elected officials like you are needed to prevent that slide into monopoly.

The committee has done important work studying this issue and raising its profile with the broader public. My hope is that this committee takes what may be its final opportunity to urge the action needed to protect the interests of Canadians.

Thank you for your time. I look forward to your questions.

[The Chair, Liberal, Joël Lightbound]

Thank you very much, Mr. Bester.

We'll now turn to Dr. Keating for five minutes.

[Dr. Bryan Keating, Executive Vice-President, Compass Lexecon]

Thank you.

Good afternoon. I'd like to thank the chair and members for inviting me to appear before you today.

My name is Bryan Keating. I'm an economist at Compass Lexecon, which is a global economics consulting firm.

By way of disclosure, my colleagues and I were retained by Rogers throughout the regulatory process, and comments I'll make today were informed by the analysis we did as part of that process.

I'd like to discuss the transaction from the perspective of economics.

For avoidance of doubt, when I talk about the transaction, I'm really referring to both pieces of the transaction: the transfer of Shaw's wireline assets to Rogers and the transfer of Freedom's wireless assets to Videotron. I'm talking about the transaction that is currently under review, not the original transaction.

My colleagues and I have been involved in assessing this transaction in various forms for close to two years now. In the course of that review, we looked at thousands of pages of documents and many terabytes of data. Our conclusions about the competitive effect of the transaction are informed by that analysis.

To me, it's clear that if you are pro-consumer and pro-competition, you should be in favour of this transaction. I'll talk a bit about why.

From an economist's perspective, the concern about mergers is that you reduce competition: You eliminate the competitor. That's not the case here. There's no situation in which you're going to reduce the number of competitors in any province in either wireline or wireless.

The transaction is going to create large benefits through economies of scale and economies of scope. Really, the only parties that are harmed are potential competitors to Rogers and Videotron, because they're going to have to compete more aggressively. That's good for consumers. That's good for competition.

The conclusion that the merger is good for competition is shared by two independent bodies, as we've already heard today.

In December, the Competition Tribunal, after a month of hearings in which they heard from dozens of witnesses and reviewed thousands of pages of documents, reached the conclusion that the transaction would not substantially lessen competition but would in fact increase competition. Just yesterday, we heard from the Federal Court of Appeal, which affirmed the tribunal's decision and in fact said that from a competition perspective, it was not a close call.

I'd like to talk a bit about why we reached that conclusion.

On the wireline side, even the competition commissioner did not challenge the transaction. Shaw's and Rogers' wireline footprints do not overlap at all. In fact, by combining those footprints, Rogers will benefit from the economies of scale that you realize from having a bigger footprint. We already see the benefits of that competition in the responses from Bell and Telus to the announcement of the transaction and to the process. Both Bell and Telus have announced billions of dollars of investment in their own networks, in part in response to what they anticipate coming out of this merger process.

On the wireless side, the combination of Videotron and Freedom, I think it's fair to say, will help achieve a long-standing policy goal in Canada, which is to create a fourth national—or at least national-scale—competitor. Videotron's footprint will cover close to 90% of the Canadian population after this transaction. As I said, achieving a strong fourth competitor is pro-competition and will achieve a goal that I think has long been sought in Canada.

As with the wireline side of things, there will not be any reduction in the number of competitors in any province. You will continue to have four competitors in every province. What the transaction is going to do is reallocate Shaw's assets, with the wireline piece going to Rogers and the wireless piece going to Videotron. Both are competitors that are well positioned to make use of those assets to enhance competition.

I'd like to say a few words about Videotron, because I think there have been a lot of questions and a lot of talk about various potential divestiture candidates.

From an economic perspective, Videotron is well positioned to compete aggressively. It has a strong incentive to compete aggressively. I think the experience in Quebec is that Videotron has been a vigorous competitor. Prices in Quebec tend to be low relative to the rest of Canada. Videotron also has important assets that it brings to bear. Most importantly, it recently licensed 3.5 gigahertz of spectrum. Combining that spectrum with Freedom's spectrum makes efficient use of a scarce and valuable resource. We've heard questions before about how companies use the spectrum they have licensed.

This transaction is a mechanism for Videotron to quickly deploy its 3.5 gigahertz spectrum into a 5G network, which has the potential to be a really high-quality network. It also creates a lot of capacity in Videotron's network. If you look at the number of subscribers Videotron will have relative to the amount of spectrum and other network assets it will have, it will have a lot of capacity to deliver high-quality services. This creates a huge incentive for Videotron to compete aggressively to grow and attract new subscribers, and that's a benefit to competition.

We've heard questions about Videotron's commitments and whether they're enforceable. From an economic point of view, our analysis doesn't rely on those commitments. It relies on the ability and the incentive of Videotron to compete aggressively.

I have two more comments about Videotron.

We heard questions before about Videotron's dependence on various facilitated agreements with Rogers. One thing that's important to note is that by creating a close-to-nationwide network for Videotron, this transaction will actually reduce dependence by Videotron on other operators in an important respect. Roaming is a critical aspect of wireless network service. Currently, because Videotron is based in Quebec, it has to rely on roaming agreements with other carriers to provide service to its customers outside of Quebec. By creating a national and international network, Videotron actually reduces its dependence on other networks, and that is an important element of competition.

The last thing I'll say about Videotron is that by increasing the scale, it has the potential to realize other benefits in terms of negotiating for handsets, network equipment and international roaming. For all these things, Videotron has a strong possibility to reduce its costs relative to what exists today. One can expect those costs to be passed on to consumers in various forms of benefits.

We've made a written submission for the committee, which involves more detail, but I'm going to stop here. I'm happy to take any questions from the committee.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

We'll now open up the discussion, starting with MP Vis for six minutes.

I'm sorry. It's Mr. Williams.

[Ryan Williams, Conservative, Bay of Quinte, ON]

Thank you very much, Mr. Chair.

Dr. Keating, thank you for your comments.

On the topic of the divestiture as a whole, when we look at the process of what happened, Rogers, the number one market share owner of wireless in all of Canada, was solely responsible, not Shaw, for vetting and picking its number four competitor, which is Videotron. The company itself was looking to buy Shaw and was the only entity that was going out to pick its competitor.

Do you think that's a fair process?

[Dr. Bryan Keating]

I guess I look at the outcome of the process, which is that Videotron is the divestiture buyer. From my perspective, Videotron is the best situated firm in Canada to acquire Freedom's network assets. It's important to look at the outcome. I understand there are questions about process. I also understand there were at least two other potential divestiture buyers that were proposed at some point. I understand—

[Ryan Williams, Conservative, Bay of Quinte, ON]

I'm going to ask something else.

Mr. Bester, you're representing one of the other organizations.

Globalive's offer, for instance, which was almost $1 billion more for the asset, wasn't included. Do you believe the process was fair, in which Rogers, the number one market share holder, picked its fourth competitor?

[Keldon Bester]

I think there's a concern with the process, and again we go back to the outcome. I go to the bureau not being satisfied. The bureau prefers to negotiate consent agreements and they do that much more often than going to litigation.

If I look at the bureau's not accepting Videotron as a remedy buyer, that's a red flag to me. Any competitor that is dependent on another competitor for key elements of its expansion plan or its competitive potential is at risk. That goes for companies beyond Videotron, including what Globalive is proposing. The process—

[Ryan Williams, Conservative, Bay of Quinte, ON]

I'm sorry, but I have only so much time. Thank you very much. That makes sense.

Professor Quaid, you mentioned that this dispute of the remedy from the bureau is new. A new precedent was set when Rogers did not accept the remedy and moved forward with the deal, and of course with what happened to the bureau.

Why is it new? Is it a big deal that a new precedent is perhaps being set in this process?

[Dr. Jennifer Quaid]

What's new is that it has never come up that a substantial modification to a deal has been challenged under section 92. It happens that there are modifications to deals, but they tend to happen further upstream in the process.

The Rogers-Shaw merger, like many and most mergers, is pre-notifiable, so the bureau gets notice that the transaction is coming, and that's the moment when you say.... Any set of merging parties that know what they're doing has looked at their transaction to see whether there are any anti-competitive problems, and they probably have solutions in their back pocket that are going to come out as soon as the commissioner says they have some concerns. They'll say, “We thought about that, so how about we do this?”, and that's the way it works.

What's unusual here is that it was not until the commissioner finally filed a section 92 application that the prospect of a sale to Videotron, which had been in the background for a long time but Rogers had said they were not interested.... They tried to sell to private equity first. I was not in those back corridors and I was not privy to those conversations. I don't know what was said and how much was known, but it's pretty clear from the commissioner's perspective that preparing to challenge a merger that was suddenly changed radically...is a big difference.

What hadn't been decided by the tribunal before is whether we can change the order of the steps that normally happen and say that first you decide if there's a competitive problem, and then you decide if there's a remedy. As is always true in litigation, he who asserts must prove, so if Rogers says that this is the right solution, they bear the burden of proving that it addresses the entirety of the competitive concerns.

[Ryan Williams, Conservative, Bay of Quinte, ON]

The question I have for you, then, is, what advice would you have for the minister right now? The minister does have authority to transfer the licences from Rogers. What advice would you give to this committee to give to the minister right now?