The Bureau is appealing its loss, and a hearing at the
Decision of the Tribunal
Post-challenge agreements between parties may be considered
The Bureau's case focused on the harm to wireless customers in
The Bureau argued that the Tribunal could only assess the merger as contemplated at the time of its initial challenge—one that was never going to take place. It argued the Tribunal should ignore the divestiture as being "irrelevant and beyond the jurisdiction" of the Tribunal to consider.
The Tribunal disagreed and ruled that asking it to "spend scarce public resources assessing something that will never happen [the acquisition of Freedom Mobile assets by Rogers] is divorced from reality". It said that the "proposed merger, as defined by the Commissioner, is no longer being proposed ... [and] intervening events occurring after the filing of an application can have a material impact on a proceeding ... [and] cannot be ignored" (emphasis in original).
Assuming the Tribunal decision is upheld on appeal, binding post-challenge divestitures or "remedies" agreed to by merger parties now need to be considered in a merger assessment. This may impact the scope and timing of Bureau reviews where parties bring a merger that has an agreed preemptive divestiture solution to address competition issues. It is open to argue for quicker reviews and fewer productions for hypothetical aspects of a transaction "that will never happen". The Tribunal emphasized that its approach is consistent with the wording of the Competition Act, which provides a for a forward-looking assessment of the "likely" competitive outcomes of a proposed merger.
Freedom Mobile is viable competition
The second major issue in the trial was whether
The Tribunal findings highlight the importance of demonstrating that a divestiture buyer will be an effective and committed operator of the divested business. The evidence showed that "
Acquisition of Shaw not an issue in
The Tribunal also determined that Rogers' acquisition of Shaw Mobile (Shaw's non-Freedom Mobile business) would not result in a substantial lessening of competition in the provinces where Shaw Mobile operates (
No ruling on efficiencies defence
Much of the Tribunal hearing focused on establishing the efficiencies defence, which involves a 'trade-off' analysis between the efficiencies expected to be gained versus any anti-competitive effects of the merger. If a merger is more efficient than anti-competitive, it will be allowed to proceed. Contrary to expectation, the Tribunal declined to comment on efficiencies because it was not necessary to reach their conclusion.
Other key takeaways from the Tribunal decision
The Tribunal also found these important points that could impact merger review, and which merging parties may consider in their transaction analysis:
- Evolving industry considerations. Where evidence demonstrates a market is likely to change, the analysis must remain "forward-looking in nature" and incorporate these changes in the comparison between the likely future with and without the merger.
- Interim operations. The Tribunal confirmed that the "but for" impact analysis of a merger starts at the date of the agreement and that merger parties cannot benefit from any weakening of their competitive position after the merger agreement is announced.
- Parties' post-merger pricing commitments. Usually, pricing commitments by merger parties are not relevant to the Tribunal's analysis. However,
Videotron's commitments to offer comparable wireless pricing inOntario andWestern Canada as it does inQuébec were considered relevant in this case because its purchase of Freedom Mobile would not give it the ability to exercise market power. - Competitor responses to a merger. The fact that, since the announcement of the merger and the Freedom Mobile divestiture, major competitors such as Bell and Telus took steps to increase their competitiveness was important to countering allegations of post-merger coordinated behaviour in the wireless industry.
- Regulation. The extensive regulation of the telecommunications industry was also significant to the competitive impact analysis of the merger.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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