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Competition in Canada Takes Another Hit: Government Gives Go Ahead for Rogers – Shaw Merger
After after years of high wireless prices, now he’s serious. If prices don’t come down, he will threaten them yet again.
Innovation, Science and Industry Minister François-Philippe Champagne has worked hard to fashion himself as a future party leader based on boundless energy to sell Canada the world. Indeed, Champagne’s oft-repeated stories of cold calls that resulted in investments by companies such as Volkswagen and Moderna paint a picture of a minister jetting around the world in support of the Canadian economy. Unfortunately, Champagne’s record is also one of a minister less interested in what is actually happening at home. His privacy legislation has languished for months and he has been entirely missing on digital policy, where fishing expeditions such as the one involving Bill C-18 are likely to make companies reticent about entering the Canadian market. This morning there was another lasting and damaging development as the approval of Rogers-Shaw merger (or more accurately the approval of the transfer of licences that pave the way for the merger) will mean that Champagne will have presided over the destruction of the competitive communications market with both another major merger and the sudden disappearance of many independent providers.
If the government was serious about competition and consumer pricing, this should have been an easy call. The deal is not popular, wireless and Internet prices remain stubbornly high, the Competition Bureau consistently opposed the deal, and a House of Commons committee that studied the merger recommended against it. Unveiling the decision on a Friday before a two-week Parliamentary break just after the budget is the tell-tale sign that the government hopes this disappears quickly as a storyline and is forgotten after the MPs return from the Easter break. While I wrote that this was the likely course back in January, it must still be noted that Champagne and the government had a choice. They could have stood with consumers and competition and simply said no.
Instead, Champagne is positioning the merger as a win for consumers, citing conditions on Videotron that he says will create a strong fourth national wireless player alongside commitments from Rogers related to jobs in Western Canada and investments in rural networks. There is lots of tough talk about damages if they fail to live up to the commitments, but that’s just a meaningless distraction from Canada’s competitive problems and successive governments that have failed to address it. Indeed, the entire announcement is filled with contradictions: claims that it will result in more competition, contracts that he says will require it, and threats to do more if that doesn’t happen.
In fact, two additional announcements highlight just how scattered and ineffective the government has been on this issue. First, Champagne announced a freeze on future licence transfers, effectively closing the barn door after the horses already out and market is already consolidated and competitors have disappeared. It’s a tacit admission that there is a merger problem after he approved the merger. Further, he added – with a straight face – that after years of high wireless prices, now he’s serious. If prices don’t come down, he’ll threaten them yet again.
This decision is not a surprise, but it still disappoints because the long-term implications for consumer pricing and the Canadian competitive environment are severe. There will be the usual honeymoon period for pricing and much hand waving about the “contract with Canadians”, but ultimately prices move in one direction when competition disappears through consolidation. In fact, it is not just the Rogers-Shaw merger (and the Bell-MTS before it) that the government must wear. In recent months, Distributel, Oxio, Ebox, Start, VMedia, and Altima have all been scooped up by larger players, leaving an independent market that is a shell of its former self. Champagne says he’s building the economy of the future in Canada, but that future sadly may be devoid of major tech investments amid hostile digital regulations and costly communications networks. Consumers will bear the brunt of those policy developments and a common dongle policy will do little to cushion the blow.
Post originally appeared at https://www.michaelgeist.ca/2023/03/competition-in-canada-takes-another-hit-government-gives-go-ahead-for-rogers-shaw-merger/
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