Canada's antitrust tribunal clears $14.8 billion Rogers-Shaw deal

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By Divya Rajagopal and Akriti Sharma

(Reuters) -Canada's antitrust tribunal approved Rogers (NYSE:ROG) Communications Inc's C$20 billion ($14.77 billion) bid for rival Shaw Communications (NYSE:SJR) Inc, lifting a 20-month-long block on the merger that would create the country's second largest telecom firm.

The ruling on late Thursday dismissed the Commissioner of Competition's plea to oppose the merger, which has been seen as a test case for the country's ability to foster competition amid growing worries of consolidation in sectors ranging from telecoms to banks.

The two companies had appealed the tribunal after the competition bureau rejected Shaw's proposal to sell Freedom Mobile Inc to rival Quebecor Inc's Videotron unit for C$2.85 billion to facilitate the deal.

It said Quebecor was not a viable competitor with the merged entity. However, in its Thursday ruling, the tribunal said such a sale would allow Videotron to expand in new markets and ensure competition remains robust.

The Rogers-Shaw merger after the sale of Freedom Mobile was "not likely to prevent or lessen competition substantially" and may not lead to "materially higher" prices or a decline in quality of service, the tribunal said.

"I am very disappointed that the Tribunal is dismissing our application to block the merger between Rogers and Shaw," Matthew Boswell, Commissioner of Competition, said.

"We are carefully considering our next steps."

The antitrust commissioner could still appeal after the tribunal lays out the details of its decision over the next couple of days.

Rogers-Shaw and Quebecor now await approval from Industry Minister François-Philippe Champagne to transfer Freedom Mobile's spectrum license to Videotron.

Champagne had in October hinted his intention to approve the sale as long as Videotron holds Freedom Mobile's assets for at least 10 years and keeps prices comparable to current levels in Quebec, which are 20% lower than in Ontario and Western Canada.

The two companies said they would now work to get the government approval for the deal that was announced in March 2021 when the Alberta-based Shaw family decided to sell the company to Rogers for C$40.5 per share.

"We view this decision as incrementally positive for the shares of Rogers, Shaw and Quebecor," RBC Capital Markets analyst Drew McReynolds said, adding that the approval leaves the door open for a January 2023 or mid-2023 closing.

U.S-listed shares of Shaw surged about 10% before the bell on Friday.

($1 = 1.3544 Canadian dollars)