Industry Committee on Jan. 25th, 2023

[Andy Kaplan-Myrth]

If the CRTC ends up throwing out that deal—if it ends up being illegal—then it wouldn't be able to form the basis of Videotron's ability to compete on wireline, wherever that deal is being offered to it. Again, we know very little about that deal. Presumably, out west at least, Videotron wouldn't be able to use existing wholesale regulated rates to compete. It wouldn't be a viable competitor on that, and it would mean that the tribunal's analysis about Videotron's ability to offer bundled services wouldn't be valid anymore. It wouldn't be current.

[The Chair, Liberal, Joël Lightbound]

Thank you very much.

We have Mr. Dong for six minutes.

[Han Dong, Liberal, Don Valley North, ON]

Thank you very much, Chair, and thanks to the witnesses for coming today.

My first line of questions is for Mr. Lacavera.

Mr. Lacavera, you talked about how anti-competitive the remedy was, but I can't help asking how Freedom under Globalive would be different from Freedom under Quebecor. What are some of the practical differences that your proposal would put in place that would be beneficial to consumers?

[Anthony Lacavera]

I did not say that the remedy was anti-competitive. What I said was the merger is anti-competitive, and it must be stopped. Then what we are recommending is that the government oversee a fair, open and transparent process to determine who is the right acquirer of Freedom for the benefit of Canadians and to ensure the best outcome for Canadians.

However, to differentiate ourselves versus Quebecor, Globalive has a 25-year history of building independent telecom competitors. By “independent”, what I mean is we don't have any legacy cable or phone business to protect. We were an independent competitor not owned by a cable or phone company. Wind Mobile, when it was under our ownership, was an independent pure-play wireless company. That means we didn't have any legacy cable or legacy telephone business we were looking to protect.

[Han Dong, Liberal, Don Valley North, ON]

Can I understand this as meaning that you would be investing in new networks?

[Anthony Lacavera]

Very much so. In addition to the upfront purchase price that we offered for Freedom Mobile, we of course would look to participate in upcoming auctions and invest in network. I mentioned rural and indigenous communities and broadly that we need to have affordable, accessible wireless networks for all Canadians. That was our original business plan with Wind. We only got as far as Ontario, B.C. and Alberta before, as I mentioned, we were dragged into a sale to Shaw.

[Han Dong, Liberal, Don Valley North, ON]

In this case, you weren't invited by Rogers to enter a bid for Freedom. Is that true?

[Anthony Lacavera]

No, it was quite the opposite. We were pursuing Rogers and had made our interest known, and Rogers did not want to entertain our offer.

This committee may hear from Rogers shortly that it could not entertain our offer because we did not enter an NDA with them. This is untrue. Rogers proposed an NDA to us that was tantamount to shutting down our proposal and bid before it even started. It gave Rogers unfettered veto over our capital partners, over our advisers. It was a gag order in terms of discussing anything with government, or publicly, about our proposal. Our bid would have been shut down before it started. We would not be sitting here talking to you today had we signed that NDA. We did sign an NDA back to Rogers, one that was a market standard NDA that would have protected all of its confidential information.

That said, we did not need to even have an NDA. We made an offer on an unsolicited funded basis anyway, because of our knowledge of the business. We built the business.

[Han Dong, Liberal, Don Valley North, ON]

I was going to ask you that question, so thanks for providing that extra information.

How would Globalive be less dependent on Telus and, by extension, on Bell, than Videotron would be on Rogers?

[Anthony Lacavera]

They're totally different propositions. We are jointly investing in a shared network. We would first be acquiring spectrum—should we be successful in winning the government's process to acquire Freedom—and contributing it to a shared network with Telus, then contributing spectrum and network on an ongoing basis into that sharing agreement, so—

[Han Dong, Liberal, Don Valley North, ON]

I want to give a bit of time to Professor Iacobucci.

Professor Iacobucci, you heard the testimony and, to your earlier comment, you think the decision was fair, but obviously the testimony in the last couple of minutes says the opposite. How would you assess that? Are there any recommendations to lawmakers like us on whether the Competition Act is sufficient and, if not, how we would improve it?

[Edward Iacobucci]

There's a lot there. Let me say that ultimately, when somebody said that Rogers got carte blanche on picking its competitors, I don't think that's quite fair to the tribunal's analysis of this. That is, the tribunal took very seriously the commissioner's argument that Videotron would not be an effective competitor. It went through, I think, quite a bit of detail about its reasons for concluding that Videotron might well be an effective competitor.

I would take a bit of an issue with the idea that it's carte blanche, because part of the competition hearing was in fact an assessment of Videotron's capacity to compete going forward.

Another thing that has come up in the discussion so far is this idea of wholesale rates and Mr. Kaplan-Myrth's comments about those. I'm agnostic on that question about whether the CRTC has this right or wrong, but I will say this: It's a really tough thing to get right, so I don't envy the CRTC's task on that. It's a difficult one.

At the same time, it is interesting to hear the comments from Globalive. On the one hand, you have TekSavvy saying it would be impossible. The current rates are making it impossible to compete, and then—

[Han Dong, Liberal, Don Valley North, ON]

I'm sorry; I have to stop you there. You said the tribunal itself was the process to prove Videotron's competitiveness, but the result doesn't say that it's the most competitive proponent. Is that right?

[Edward Iacobucci]

That's quite right. The purpose of the law is not to get into fine-tuning what happens in markets. Competition law, I think, starts from the proposition that—

[Han Dong, Liberal, Don Valley North, ON]

Then do you think that allowing all—

[The Chair, Liberal, Joël Lightbound]

I'm sorry, Mr. Dong; I have to stop you there because your time is up.

Mr. Lemire, it's your turn now, and you have six minutes.

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

Mr. Chair, I will again refer to Project Fox.

In the opening remarks, I heard that this project was supported by the New Democratic Party, among others. There is something about Project Fox that comes up often, namely, being able to continue to pursue this strategy of dominance, particularly with the leader Jagmeet Singh who will be able to ask the prime minister about the “kill, shape and slow” strategy during question period. This is loaded vocabulary, especially when they act that way in committee.

I also heard in the opening remarks that Telus, Bell and other stakeholders, including academics, have been putting on the pressure in this case. A document made public by the court indicated that one of these third parties is in fact the Canadian Media Concentration Research Project at Carleton University.

My question is for you, Mr. Klass. Have you had any contact with Telus? Have you distanced yourself from the use of your intellectual property or of your judgment, in this case?

[Ben Klass]

I have never taken money from Bell or Telus. Like most people, I give them my money.

I have already seen that document. I think they identified stakeholders they would seek to co-opt. I met with people from Telus on one occasion, an academic named John Gannon, to discuss a white paper it published about spectrum policy. There was never any exchange of money. This topic of the merger did not come up. I'm 100% independent in the comments I provide today.

I think, if you go through the record of things I've said in public and published, you'll see that it doesn't matter what colour the brand logo is. I generally oppose anti-competitive or unfair behaviour by those companies.

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

Thank you for clarifying this. I think it was important to give you a moment to clear your name, in a way, in this regard.

In your editorial for the Globe and Mail, you stated that Québecor, or Vidéotron, was the best possible solution to ensure competition and be the fourth player in the telecommunications market. You also mentioned that Vidéotron had been very successful in Quebec, in particular by providing a reliable presence in the market and reducing its prices.

Does the fact that prices are considerably lower in Quebec demonstrate that Vidéotron was agile in a sense and was able to seriously address consumers' needs and expectations by pushing prices lower elsewhere in Canada?

[Ben Klass]

For years, in the yearly reports published by the Canadian Media Concentration Research Project, we've done an analysis of provincial markets for mobile wireless service. I'm chiefly responsible for that section. I definitely agree that Quebec in recent years, due to Videotron, has set an example of the type of competition that could emerge from the fourth carrier policy.

That being said, the equation changes slightly when Videotron leaves Quebec. To be clear, I would like to see it succeed. If Videotron steps into the role that Freedom did, there is a chance it could do so.

I would like to see outcomes that are beneficial for consumers. However, there's a substantial risk that in transferring Videotron into the shoes of Freedom—but removing, chiefly, its connection to the underlying broadband facilities that it has available in its home province, and replacing that with these agreements with Rogers—it places Videotron in a completely different position in the rest of Canada.

While I would like to see it succeed, what I've seen in the past—and this is going back to the days of the rotary phone—is that companies like Bell or Roger have these arrangements whereby smaller companies depend on them, and they can use these to squeeze and eventually crush them. With Videotron moving into the rest of Canada, I worry it's so dependent on Rogers that it won't have the strength it has in Quebec, and that it won't be able to have the effect it's had there.

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

Let's talk about the future of this agreement. If you could impose conditions in the western provinces, which ones would be needed for Videotron to succeed in lowering these prices, in your opinion?

What do you think of the conditions other players such as Bell and Telus would have to meet, and also show that they can negotiate lower rates and are also acting in good faith?

Should that be demonstrated at this stage?

[Ben Klass]

My position is that the best way forward to promote competition is to block the merger and allow the companies to compete on a market basis.

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

I have a little bit less than one minute left.

Mr. Iacobucci, do you wish to respond to these questions?

What conditions should be imposed on Videotron so that it can succeed in pushing prices lower?

[Edward Iacobucci]

Again, coming at this from the perspective of competition law—which is where I come at it from—I think what the tribunal did was a careful assessment. This was not a sweetheart deal by Rogers in order to protect itself from future competition. The tribunal took the commissioner's argument seriously that Videotron would potentially not be as vigorous a competitor. It analyzed that carefully and came to the conclusion that Videotron has a history of success and there's no reason to think its success would not continue post acquisition.

From a competition law perspective, I think the tribunal discharged its duty exactly in answering those questions about the vigorous competition remaining.

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

Thank you very much.