Rogers’ bid for Shaw gets boost after court rejects antitrust effort to block deal

By Maiya Keidan

TORONTO (Reuters) -A Canadian court on Tuesday dismissed the competition bureau’s effort to block Rogers Communications Inc’s C$20 billion ($14.9 billion) bid to buy Shaw Communications Inc, in a boost to the companies’ efforts to close a deal struck nearly two years ago.

“It would be pointless to send this case back to the competition tribunal for re-decision,” Justice David Stratas told the court, calling many of the points of law the antitrust agency raised “without merit”.

The proceeding in a Federal Court of Appeal in Ottawa was the antitrust bureau’s latest attempt to kill the deal, saying the transaction will hurt competition in the telecoms industry in Canada, where consumers pay some of the highest mobile phone bills in the world.

Rogers and Shaw shares jumped on the decision, and both were trading up about 3% in late afternoon trade, while the benchmark Canadian share index was lower.

Announced nearly two years ago, the deal has become a test case for the competition bureau’s ability to increase choices for consumers in Canada, where a handful of companies control large swaths of business.

Rogers offered to sell Shaw’s Freedom Mobile unit to Quebecor’s Videotron for C$2.85 billion to address antitrust concerns, but the competition bureau argued that a merged Rogers-Shaw would not have a viable competitor in Quebecor.

Shaw and Rogers intend to finalize the deal by Jan. 31, though the deadline can be extended in agreement with Quebecor.

Industry Minister Francois-Philippe Champagne, who has the final say on the transaction, said in a statement later on Tuesday that he would review the court ruling on the deal and that competition and affordability in the telecoms sector remained a top 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 any such move would need to be first reviewed by a committee of senior members in the Justice Department who usually try to avoid sending what they might consider to be cases with little merit, to the top court.

Judges spent the morning grilling competition bureau counsel on their case against the transaction and delivered their verdict in the afternoon without hearing from Rogers and Shaw.

The bureau previously failed to convince the competition tribunal, a quasi-court that handles merger disputes, that the deal is harmful for Canadian consumers. It was approved on Dec. 30.

“According to the tribunal, this was not a particularly close case,” the judge told the court on Tuesday. “It found, I would say, on the evidence rather decisively that there was no substantial lessening of competition.

“They also found a number of pro-competitive considerations.”

Canada’s Competition bureau, Rogers Communications and Shaw Communications did not immediately respond to a Reuters request for comment.

(Reporting by Maiya Keidan in Toronto, additonal reporting by Mehta Chavi and Ismail Shakil; Editing by Denny Thomas, Mark Porter and Deepa Babington)