TORONTO, Jan 24 (Reuters) – A Canadian court on Tuesday dismissed the competition agency’s effort to block Rogers Communications Inc’s ( RCIB.TO ) C$20 billion bid to buy Shaw Communications Inc (SJRb.TO), on a boost. to the efforts of the companies to close an agreement reached almost two years ago.
“It would be futile to send this case back to the competition court to be decided again,” Judge David Stratas told the court, calling many of the points of law raised by the antitrust agency “without merit.”
The suit in a Federal Court of Appeal in Ottawa was the latest attempt by the antitrust agency to end the deal, saying the transaction will harm competition in the telecommunications industry in Canada, where consumers pay some of the highest cellphone bills in the world.
Shares in Rogers and Shaw took the decision, with both trading up around 3% in late afternoon trade, while the benchmark Canadian stock index (.GSPTSE) was lower.
Announced nearly two years ago, the deal has become a test case for the competition agency’s ability to increase consumer choice in Canada, where a handful of companies control large swathes of business.
Rogers offered to sell Shaw’s Freedom Mobile unit to Quebecor’s ( QBRb.TO ) Videotron for C$2.85 billion to resolve antitrust concerns, but the competition office argued that a merged Rogers-Shaw would not have a viable competitor in Quebecor.
Shaw and Rogers aim to finalize the deal by January 31, although the deadline may be extended in agreement with Quebecor.
Industry Minister Francois-Philippe Champagne, who has the final say on the transaction, said in a statement Tuesday that he will review the court ruling on the deal and that competition and accessibility in the telecommunications sector remain a priority.
National Bank of Canada analysts said in a note last week that the bureau could also appeal to the Supreme Court and would have 60 days to do so.
But they noted that any such move would first need to be reviewed by a committee of senior Justice Department members who typically try to avoid sending what they might consider meritless cases to the high court.
The judges spent the morning arguing their case against the transaction to competition office lawyers and delivered their verdict in the afternoon without hearing from Rogers and Shaw.
The office previously failed to convince the competition court, a quasi-court that handles merger disputes, that the deal is harmful to Canadian consumers. It was approved on December 30.
“According to the court, this was not a particularly close case,” the judge told the court on Tuesday. “I would say that the evidence was pretty conclusive that there was no substantial lessening of competition.
“They also found a number of pro-competitive considerations.”
The Competition Bureau of Canada, Rogers Communications and Shaw Communications did not immediately respond to a Reuters request for comment.
Reporting by Maiya Keidan in Toronto, additional reporting by Mehta Chavi and Ismail Shakil; Edited by Denny Thomas, Mark Porter and Deepa Babington
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