Yesterday, Rogers Communications Inc. announced it’s planning to buy the Calgary-based Shaw Communications for more than $26 billion. Rogers is using cash on hand and some new debt to buy its western rival for $40.50 a share, a premium of 70 per cent per share above Shaw’s recent trading price.
It’s a boatload of money to have lying around, especially for a company that just accepted more than $80 million in federal COVID-19 wage subsidies.
Anyway, Shaw is currently the fourth-largest wireless provider in the country, and has a lock on western Canada. Being gobbled up by the Rogers behemoth would further cement the dominance of the big players in providing us with internet, phone and television access, and turn Rogers into the second-biggest telecom company in the country.
Neither side expects the deal to go through until 2022, because it must first pass approval by shareholders — the Shaw family makes up most of voting shares, so that part is a lock — and federal regulators. This is where the Competition Bureau is supposed to come in.
The idea is that this government body gives us a public mechanism to prevent large corporations from achieving their final, true-capitalist form — big-ass monopolies. So, they could look at the whole deal and say something like “this is anti-competitive, we can’t allow it.” It’s possible they may also force the companies to sell off parts of their business — a chunk of the wireless elements, say — to make the deal less-monopolistic.
Or they could do the most likely thing: absolutely squat. We just so happen to have a recent example of the uselessness of the Competition Bureau.
A few years ago, Canada’s two biggest newspaper publishers, Postmedia and Torstar, made a deal to trade a bunch of community newspapers and immediately shut them down. This gave them each the ability to achieve exclusive control in different parts of Ontario.
That sounds a wee bit anti-competitive on its face. And the Competition Bureau seemed to initially think so, too. They opened an investigation, and went so far as to raid the offices of Postmedia, Torstar and Metroland (Torstar’s community newspaper subsidiary). And then, after literal years of investigation, they just dropped the whole thing.
This despite having internal emails from both companies trying to figure out “who will terminate whose staff” and other damning exchanges, according to a deep dive into the investigation by The Tyee. The law governing competition would seem to explicitly forbid such things, making it an offence if anyone “conspires, agrees or arranges [to] allocate sales, territories, customers or markets.”
Seems the Bureau didn’t think they had enough evidence in the emails, and it’s not even clear if they actually interviewed executives who made the decisions.
Besides, they’d previously approved Postmedia swallowing up the Sun chain of publications, after the company promised it would never combine newsrooms in cities where there were two papers. When the company eventually turned around and merged the Sun papers into its existing local newsrooms, there were absolutely no consequences.
Rogers has promised to add 3,000 jobs in the provinces west of Ontario, and will maintain a regional head office in Calgary. But, Rogers also says it expects to save $1 billion per year through the merger.
Promises about keeping jobs and cutting costs are something of a farce. Every time a new merger happens, in any industry, leadership makes lots of noise about how it won’t lead to job cuts, higher costs or worse service. These promises are worth basically nothing.
Then again, Alberta Premier Jason Kenney is happy to buy this transparent bullshit, recently saying, “The plan outlined by Rogers and Shaw would mean significant net job growth in Alberta, especially in high-paying high-tech jobs. This would further diversify our economy.”
Show me a company promising to keep or increase jobs after a merger, and I’ll start a countdown timer for job cut announcements.
We also have a pretty good example of what happens when a central Canadian telecom company buys out a smaller western rival. Six months after Bell bought out Manitoba Telecom Services (MTS) in 2017, prices started to rise. Then, in 2019 Bell announced a planned rural internet expansion was going to be scaled back, despite a pledge to invest $1 billion in rural infrastructure.
So, when Rogers CEO Joe Natale says the Shaw merger will go about “bridging the digital divide” between cities and rural areas, as well as Indigenous communities, you’ll forgive me for being more than a little skeptical. He went on to say, presumably with a straight face, “This combination is the right thing for Canada and consumers.”
It’s fitting that as the Rogers merger deal was making the rounds, so too was a CBC story about a 91-year-old woman with dementia facing a more than $550 bill from Rogers for not returning cable equipment when she downgraded her service. She couldn’t return the equipment because the pandemic put her long-term care home into lockdown, her family wasn’t able to see her for months, and the technician who was supposed to pick it up never showed. Yet the company was unwilling to waive the fees until they started hearing from CBC. Realizing this would look bad, they refunded the money and gave her three months of free cable.
As Rogers absorbs another company, this sort of thing will only continue. There’s nothing stopping them from continuing to offer bad service once another competitor just becomes another regional tentacle in the empire.
Competition is the promise that holds up our privatized system of telecommunications policy. Where once phone companies were nationalized institutions, their privatization was supposed to spur innovation and growth.
Instead, we’ve seen the erosion of competition through the increasing consolidation of telecom companies. And for our troubles, we pay some of the highest prices in the world for internet and wireless services.
A real country, one set up to do more than meet the whims of corporations, would put a stop to a deal like this. Which is precisely why Canada won’t.