Shaw Communications Inc. told Canada’s Competition Tribunal that it couldn’t compete effectively without merging with Rogers Communications Inc. 

“This isn’t the first time that we considered consolidation within the sector,” Trevor English, Shaw’s chief financial officer, said Monday in testimony. “This has been part of our process that’s been going on for many years, and we just didn’t see a viable path forward as a standalone company.”

Since Shaw entered the wireless business by acquiring Wind Mobile, later renamed Freedom Mobile, the company has been struggling to keep up with its main competitor, Telus Corp., in Western Canada, English said. That also reflected in its share price underperformance over the past decade, which led to “difficult conversations” with investors, he said.

“We’ve really felt like the best outcome for all constituents was a partnership and a sale to a strategic operator that has the operational scale to effectively compete in the future,” English said. “This isn’t a distress. This is about a forward-looking analysis and the challenges that we had in our business.”

That testimony is a central argument for Shaw, which is trying to gain regulatory approval to be taken over by Rogers in one of the biggest corporate deal in Canada’s history. The two companies also have a side deal with Quebecor Inc. to sell Freedom Mobile in an attempt to appease regulators, who have concerns over wireless competition.

The $20 billion (US$14.9 billion) transaction to would unite two billionaire cable families is now halfway though the hearing at the tribunal, Canada’s version of a merger court. Competition Commissioner Matthew Boswell brought the case to try to block the deal. 


Earlier Monday, Pierre Karl Peladeau, Quebecor’s chief executive officer, said his company has always had an aspiration to be a national wireless player, and buying Freedom Mobile would help it achieve that goal and establish a new growth driver. 

The Freedom deal would double the number of Videotron subscribers to nearly 3.5 million, and the bigger wireless operations would be a significant vehicle for growth for the company in markets outside of Quebec at a time when the traditional cable business is in decline, he said.

Over the past two weeks, the tribunal has heard from more than 20 witnesses, including executives from BCE Inc. and Telus as well as experts in telecommunications and economics. Lawyers representing Rogers and Shaw are arguing that the transaction is a “pro-competitive deal” that will bring better services and lower prices.

The law may be on Rogers’s side. Canada’s competitive law is remedy-oriented and gives merging companies a powerful legal weapon in the “efficiencies defense,” allowing them to argue that the cost savings are so great that they outweigh the harmful impacts on competition. 

The three-panelist tribunal led by Chief Justice Paul Crampton will hear closing arguments in mid-December, and is expected to render its decision in January.

BNN Bloomberg is owned by BCE, through its Bell Media division.