Was The Competition Tribunal’s Decision On Rogers-Shaw Merger Rushed?

The Competition Bureau has filed a notice of appeal with the Federal Court of Appeal to challenge the Competition Tribunal ruling allowing the pending Rogers Communications (TSX: RCI.B) and Shaw Communications Inc. (TSX: SJR) merger to proceed. The agency alleges the tribunal made legal errors in its rush to issue a judgement before the end of the year.

“We have filed a notice of appeal with the Federal Court of Appeal in response to the Competition Tribunal’s decision to dismiss our application to block Rogers-Shaw,” the bureau said in its tweet.

The tribunal just recently dismissed the case put forth by the bureau to challenge the merger of the two Canadian communications firms based on anti-competitive concerns.

“The Tribunal has determined that the proposed transactions and ancillary agreements comprising the arrangement are not likely to prevent or lessen competition substantially,” the tribunal said in its summary of decision.

READ: Competition Tribunal Approves Rogers-Shaw Merger Despite Considering Network Outage

Meanwhile, Rogers and Shaw expressed their disappointment that Commissioner of Competition Matthew Boswell is appealing the judgment and seeking an injunction that, if granted, would delay the transaction from closing until the issue is considered by the Federal Court. Rogers, Shaw, and the Shaw Family Living Trust have agreed to extend the Rogers-Shaw Transaction’s outside date to January 31, 2023.

“The tribunal’s decision was the right one, and the tribunal was clear in its summary that the transactions we have proposed are not likely to substantially lessen competition in Alberta and British Columbia,” the firms said in a statement. “We are deeply disappointed that the Commissioner continues to attempt to deny Canada and Canadians the advantages that will come from these proposed transactions.”

The bureau stated in its notice of appeal that the tribunal made “two fundamental errors of law” in its rush to reach a verdict. Both alleged irregularities involve the three-member panel focusing on the divestment of Freedom Mobile to Videotron, a subsidiary of Quebecor (TSX: QBR.B), in a $2.85-billion deal. The agency said this was only suggested after the bureau filed an application to halt the overall merger.

READ: Selling Freedom Mobile “Not An Effective Remedy” To Rogers-Shaw Merger Woes, Says Competition Bureau

“The tribunal issued its decision regarding the largest and most complicated challenge of a merger in Canadian history in an unprecedented fifteen days,” the bureau said, adding that the case included evidence from more than 40 witnesses and nearly 2,000 exhibits.

The tribunal generally takes months to deliberate rulings, but it has assured onlookers that it is sensitive to commercial pressures and will work hard to reach a conclusion as soon as possible.

The companies’ lawyers had warned that if the deal doesn’t close by January 31, it might break apart, and that Rogers would have to pay around $260 million to its bondholders to extend the deadline into the end of 2022.

Was it rushed?

University of Ottawa law professor Michael Geist highlighted in a twitter thread the seemingly mixed up timelines by the tribunal in getting its decision out. He pointed out that the tribunal issued a statement on December 21 promising to provide 24-48 hours notice of the “time and date of the issuance of its decision.”

However, the tribunal released a “summary” of its decision on Thursday, allegedly “without any notice.” The full decision itself wasn’t available yet; in its decision, the tribunal pointed out that it is “working towards issuing a public version of its full decision in both official languages within approximately 48 hours.”

“But the Tribunal is supposed to serve the public interest, not Rogers-Shaw. By expediting a summary release without the actual decision, it appears to be little more than a corporate rubber stamp,” tweeted Geist. He added it is astonishing that the tribunal seemingly skirted the 24 to 48-hour advance notice “by releasing a ‘summary’ rather than the actual decision,” and that clear goal was just to get something out by the end of the year “as requested by Rogers-Shaw.”

With the tribunal’s approval, the only regulatory hurdle that remains for Rogers and Shaw is that from the Minister of Innovation, Science and Industry, François-Philippe Champagne–whom is being called upon to disapprove the merger.

Rogers Communications last traded at $63.37 while Shaw Communications last traded at $28.78 on the TSX.

Information for this briefing was found via The Globe and Mail and the sources mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

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