Canada judge calls into question regulator’s argument to block Rogers-Shaw deal By Reuters

By Maiya Keidan

TORONTO (Reuters) -A Canada federal judge called into question the competition bureau’s argument to block Rogers (NYSE:) Communications Inc’s C$20 billion ($14.9 billion) bid for Shaw Communications (NYSE:) Inc as the court hearing kicked off on Tuesday.

The proceeding in a Federal Court of Appeal in Ottawa is the antitrust bureau’s latest attempt to kill the deal, saying the transaction will lessen competition in Canada’s telecoms industry, which has some of the highest mobile bills in the world.

But the bureau 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.”

Jonathan Hood, a lawyer for the bureau, later noted that while the tribunal identified pro-competitive aspects of the deal, it never found that markets would benefit from reduced costs.

“We never get a finding by the tribunal that overall customers in the relevant markets are going to benefit from lower prices,” Hood said.

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 businesses.

At stake is one of Canada’s biggest-ever M&A deals, along with millions of dollars in legal and financial advisory fees. Investors have been closely watching the outcome and Shaw shares have rallied in recent months on optimism over the deal’s success. In early Tuesday trades, Shaw shares were up 1.3%, while Rogers rose 1%, bucking a drop in the benchmark Canada share index.

CONCESSION

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

Alexander Gay, another counsel for the bureau, told the court that the divestiture of Freedom to Videotron was a “parasitic agreement.”

“What we have is a parasitic agreement that’s…