(Adds details from hearing)
VANCOUVER, March 29 (Reuters) - A merger of Rogers Communications Inc and Shaw Communications Inc would result in sufficient market competition, their chief executives said on Monday, as a Canadian parliamentary committee grilled the firms’ officials on anti-trust aspects of the deal.
Rogers agreed to buy Shaw in a C$20 billion ($16 billion) deal that would create Canada’s second-largest cellular and cable operator. But the Canadian government was quick to say it would attract stiff regulatory scrutiny.
“I truly believe that these two companies coming together and the investments that are going to be made, there will be as much competition in the future as there was in the past,” Shaw CEO Brad Shaw told a parliamentary committee in a livestreamed hearing.
The deal represents Rogers’ second attempt in less than six months to consolidate Canada’s concentrated C$53.1 billion telecoms market, in which the top three operators control about 90%. Rogers’ effort to buy Cogeco Inc’s Canadian assets was rebuffed by Cogeco’s top shareholder in September.
Competition will not be “lessened because of this change; if anything it will be intensified,” Rogers CEO Joe Natale told the committee.
Both men repeatedly deferred to the government’s regulatory review process when pressed on measures such as divesting Shaw’s Freedom Mobile, a smaller telecoms carrier.
The deal has triggered particular concern about Canada’s upcoming 5G spectrum auction, which was delayed for a year due to the COVID-19 pandemic and is scheduled for June.
Smaller companies will be hard-pressed to participate, said Anthony Lacavera, a Canadian telecoms executive who originally founded what is now Freedom Mobile, because of the challenges of raising capital in a consolidated market.
“I’d be going to investors and saying, ‘We’re not sure that we can get any of the spectrum, and the rules don’t really allow us to ensure we get any,’” Lacavera said.
Canada’s mobile wireless plans are among the most expensive in the world, according to the most recent government study from 2019.
Last year, Prime Minister Justin Trudeau’s minority Liberal government ordered Canada’s top three telecom operators to cut prices on their mid-range wireless service plans by 25% within two years or face regulatory action.
Rogers’ shares were up 1% after the hearing, while Shaw’s were up by 0.35%. (Reporting by Moira Warburton in Vancouver; Editing by Dan Grebler)