Industry Committee on Jan. 25th, 2023

[Tony Staffieri]

As I said earlier, we went through a process that was very comprehensive and robust. We looked at the criteria in front of us, and this government, the minister in particular, as well as previous successive governments of this country, were looking for a fourth wireless competitor that was robust. The minister went further. He wanted a remedy that was going to have a credible acquirer of Freedom wireless—“credible” meaning that they had experience as an operator and—

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

You're telling me that it wasn't your decision to pick Videotron. You would have picked Globalive, but the minister made you pick Videotron. It sounds like that's your answer. Is that your answer?

[Tony Staffieri]

I'm walking you through the criteria that the minister laid out for us, as we work through those criteria in terms of having a balance sheet and having operating experience, but also, importantly, having a very credible path to 5G. Videotron had purchased—

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

Let's be specific. Rogers would have preferred to accept the Globalive offer, but you felt you needed to accept less money from Videotron, because the government wanted you to do so. That's basically what you're telling us, from what I can tell. Is it yes or no?

[Tony Staffieri]

We went with an option that met the criteria, and ultimately the tribunal and the appeal court found—

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

That's not my question. You had a duty to shareholders Why would you accept less money, unless it also came with less competition?

[Tony Staffieri]

We had to find a solution that was pro-competitive. Price is only one factor of the variables to ensure a robust fourth carrier. We have a solution with Videotron that is the most viable in ensuring the fourth wireless competitor in Canada.

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

Okay. Let me put it a different way, then. What's a better deal? I don't know. I have no idea. We've heard testimony today. The Competition Tribunal heard some testimony. The Federal Court had a hearing as well. The minister's been seized with this file. Sitting here today, I don't know what a better deal would be in terms of competition. Is it Videotron? Is it Globalive?

Why should you, Rogers, the most dominant player in a heavily concentrated sector that matters so much to the affordability of Canadians, get to decide who the fourth player is?

[Tony Staffieri]

We went through a process, together with Shaw, looking at alternatives. We had many bidders. In fact, we put two other bidders—

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

That's not my question.

Why should you decide?

[Tony Staffieri]

We went through an iterative process with the regulatory bodies. In fact, we put—

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

That's not my question.

Why should you decide? You're the most dominant player in this marketplace. Why do you get to decide who the fourth player is? Do you think that's fair?

[Tony Staffieri]

We went through the process to ensure the outcome was the most viable fourth player in the country.

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

I know these are lines you have memorized, but those are not answers to my question.

Why should you get to decide? This is spectrum, by the way, that was discounted for Freedom, and ultimately came to Shaw. It is a public good, ultimately. That's why the minister gets a say on the transfer of this licence.

Why should you get to decide who the recipient is?

[Tony Staffieri]

We were in the position, as a result of our agreement with Shaw, to look at alternatives that were going to be the best divestiture alternative for Freedom. We looked at the criteria that the government put in front of us, and we put forward the most viable option that met all the criteria. What you saw coming out of—

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

I'm wondering what that means, but I have a question for Shaw.

What happens if the deal isn't approved?

[Trevor English, Executive Vice-President, Chief Financial and Corporate Development Office, Shaw Communications Inc.]

That's a scary proposition. We faced a lot of challenges in 2021 when we decided to sell the company. The challenges and issues we're facing haven't gotten any better; in fact, they've gotten worse.

We don't have a credible path towards true 5G. We don't own the spectrum; Mr. Péladeau does. That's why it makes so much sense to put Freedom and Videotron together. There have been substantial investments made by our key competitor on the wireline side of things. We continue to be outflanked by Telus on numerous fronts, and we are underinvesting versus others.

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

I know Rogers is the only partner you could possibly sell to. Of your revenue, 83% is wire line, and that's what Rogers wants. That's why it's such a profitable deal for them. Is there no other partner than Rogers, no partner other than the most dominant player in the market?

[Trevor English]

We firmly believe that this set of transactions is pro-competitive and enhances competition on both the wireline and wireless sides of things.

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

You told me the same thing about the sale of Freedom to Rogers, until everyone told you it wasn't, and then you had to spin it off.

You painted a picture of competitors fighting the merger, and you basically said to us that if competitors were fighting the merger, then it must be good for competition. Let's pause for a second there, because there are not just competitors fighting the merger; there are independent experts like Ben Klass and Michael Geist. The majority of Canadians are expressing concern with this merger through polling and certainly in our inboxes.

What do you make of the fact that there aren't just competitors, but it seems to be an overwhelming majority of Canadians who don't have trust in this merger? They don't trust Shaw; they don't trust Rogers, and they don't trust this heavily regulated oligopoly to deliver affordability for Canadians.

[Trevor English]

Mr. Erskine-Smith, we went through a very comprehensive and long regulatory process, which was adjudicated through a very thoughtful tribunal that came to the conclusion that was reaffirmed yesterday by the Federal Court of Appeal: that this series of transactions is pro-competitive, increases competition and will lead to better innovation and better pricing over the long term for Canadians.

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

I know I'm out of time, but what I read is that this deal won't substantially lessen competition. As I've said to others, I'm not interested in that threshold and that question. I want to see what is best for competition, and what I see right now are very wealthy individuals saying that this is going to be pro-competitive, something you've said time and time again, and Canadians just don't trust anymore, because these wealthy individuals are wealthy at the expense of our pocketbooks for an essential service.

Anyway, thanks very much for the scripted answers.

[The Chair, Liberal, Joël Lightbound]

Thank you, Nate.

Mr. Lemire, you have the floor for two and a half minutes.

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

Thank you, Mr. Chair.

Mr. Staffieri, I will try to ask my colleague Nathaniel Erskine‑Smith's question again, but I'll phrase it differently.

First, the full transaction in which you were to acquire the assets of Freedom Mobile was rejected due to lack of competition. You couldn't have been that competitor. If it had been sold to a competitor other than Videotron, like Bell, Telus, Globalive, Distributel or another company, do you believe the Competition Bureau, the minister or the CRTC would have approved that transaction?

[Tony Staffieri]

Mr. Lemire, it's not my place to decide what the Competition Bureau would or would not approve. What I can tell you is that we looked at the criteria and—as you look to the criteria of what was going to be a credible fourth wireless player in this country, the criteria that the minister laid out, which are very intuitive, by the way—they are that the buyer has to have a strong balance sheet, which Videotron has. They are a public company, and they've been in business. It's not just closing the transaction but, to continue to make the investments that are needed in a network across the country, the buyer had to be a credible operator. Videotron operates today in both cable and wireless. They've demonstrated the ability to disrupt the market with competitive pricing.

Finally, they needed to be credible in building a 5G network. There were no other bidders that had 5G spectrum, which is very critical, to the extent that Videotron had.

We chose the one that we believed met most, and I have to tell you that the process was very iterative. If you look to the tribunal documents, we proposed two other bidders early in the process, and they were rejected. As we went through that iterative process with the government, it became clear what the most viable option was going to be, and that's the one we recommended. As you heard earlier, the tribunal went through an exhaustive trial—31,000 pages, 1,900 exhibits, 44 expert witnesses—and concluded and validated that this is going to be a pro-competitive series of transactions.