Canada's Competition Bureau isn't done arguing against Rogers-Shaw merger

The Competition Bureau is asking the Federal Court of Appeal to set aside a decision by the Competition Tribunal dismissing its case against Rogers Communications Inc.'s $26-billion takeover of Shaw Communications Inc.

The federal competition regulator says the tribunal made a mistake in how it assessed the deal, alleging that the tribunal made fundamental errors of law.

The first reason given was that the tribunal made its decision based on the merger, as well as on the proposal that would see Quebecor Inc.'s Videotron acquire Shaw's Freedom Mobile business, rather than on Rogers' acquisition of Shaw alone.

The second reason was that the tribunal assessed the Freedom Mobile sale without consent from the bureau's commissioner, Matthew Boswell, the document said.

In its ruling last week, the tribunal said the merger was not likely to result in higher prices for wireless customers and that it was satisfied the plan to sell Freedom Mobile was adequate to ensure competition isn't substantially reduced.

The bureau says the Federal Court of Appeal has issued a temporary suspension of the tribunal decision until the regulator's application for a stay and an injunction can be heard.

At least two analysts downgraded Shaw's shares after the court's stay order, citing worries that the deal would not close on its slated Jan. 31 date.

The bureau had argued that the merger of the two telecommunications companies would lessen competition, trigger higher prices and lead to a worsening of service.

WATCH | Competition Tribunal clears the way for Rogers-Shaw merger: 

Competition Tribunal paves way for Rogers-Shaw merger

2 years ago

Duration 2:07

The federal Competition Tribunal has cleared the way for Rogers' merger with Shaw Communications, stipulating that the acquisition can only proceed if Shaw sells its wireless division Freedom Mobile to Quebec-based Videotron.

The timing for a hearing of the bureau's appeal hasn't yet been decided, Competition Bureau spokesperson Jayme Albert said in an email to CBC News on Tuesday.

"We remain very disappointed by the Competition Tribunal's decision to dismiss our application against Rogers-Shaw."

Analyst says bureau faces 'uphill battle'

RBC Capital Markets analyst Drew McReynolds said in a note that the bureau faces an "uphill battle" in its effort to overturn the tribunal's dismissal of its case.

Even with the regulator having secured a temporary stay to halt the deal, there are still multiple paths ahead to closing it, McReynolds said.

"While the timing of the deal closing continues to be somewhat uncertain, we believe each of the three companies remains committed to the transactions and that there is a high likelihood that the transactions close."

Possible paths to closure include denial by the Federal Court of the bureau's appeal, denial of a halt to the deal before an appeal is heard, and an expedited appeal process that could see a decision issued by mid-2023.

McReynolds said that while he is confident the deal will be approved, potential avenues that may scuttle it include a bureau win at the Federal Court of Appeal or, in the case of a loss, lengthy delays brought on by leave for the bureau to appeal to the Supreme Court of Canada. There is also the potential for Innovation, Science and Economic Development Canada to reject the merger.