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(Bloomberg) — Rogers Communications Inc. The proposed acquisition of Shaw Communications Inc. poses “very serious” competitive issues for Canadian authorities considering whether to proceed, said Francois Philippe Champagne, Minister of Innovation.

Consumer prices are one of the central issues in the review, according to Champagne, a key figure in Justin Trudeau’s proceedings. In an interview with Bloomberg News on Tuesday, Champagne said the government’s decision would be a breakthrough with lasting impact on the telecommunications industry.

The $ 16 billion merger poses “a very serious and very important issue in maintaining that level of competition.” This will reduce the number of wireless providers from four to three in about two-thirds of Canada, including the Toronto and Vancouver markets.

Wireless concentration is the biggest regulatory hurdle to closing a deal as proposed. The Government of Canada’s policy of more than 10 years is that Rogers, BCE Inc., and Telus Corp are the fourth players to resolve consumer complaints about high prices. Was to encourage competition with.

“Affordability, competition and innovation are key to the telecommunications sector,” Champagne said in a video conference. “Clearly, the proposed deal will be reviewed with these lenses, ensuring that Canadians have access to affordable and competitive prices in telecommunications and foster innovation in that area.”

Shaw’s shares are trading at a discounted price than a cash offer of $ 40.50 per share due to the long closing time (which can take a year or more to complete), risk regulators said. Block it or force the change. After Bloomberg reported champagne remarks on Tuesday, the show bounced back and closed at C $ 33.28, after dropping to C $ 32.25. Rogers fell 1.2% to C $ 59.64 in Toronto.

A spokesman for the show declined to comment. Rogers does not return a request for comment.

Combine forces

Announced on March 15, the deal integrates Canada’s two largest cable providers, with little geographical overlap between cable TV and broadband Internet businesses.

The two companies say the deal could spend billions of dollars on faster networks and better services to remote and rural areas of Canada’s vast regions. “I believe Canada needs dynamic competition, not magic number competitors,” in response to a question from a member of the House of Commons committee, President Paul Makaridase of the show.

But critics say that in an industry already dominated by three large incumbents, losing a small competitor like Shaw’s Freedom Mobile unit could increase consumer costs. I’m warning you.

This transaction needs to be endorsed by the Canadian Department of Competition, industry regulators and the Government of Trudeau. Most analysts expect the deal to be approved by the government and regulators in 2022, but there are provisions. For example, regulators will almost certainly force Rogers to sell some of Shaw’s wireless assets.

Champagne said he wasn’t convinced by the big telco claims that integration was needed to defeat the benefits of new players in the wireless sector and drive innovation.

Canada has sought to drive competition by offering discount spectrum to new wireless players at auctions. This is a policy that Shaw has benefited from. The company was the third largest purchaser of the 600 MHz spectrum in 2019, spending approximately $ 500 million ($ 396 million) to obtain 11 licenses nationwide.

“New entrants have repeatedly shown that they can create that level of competition in a country as big as Canada,” Champagne said. “History shows that they have played an important role in trying to lower prices and bring more competition to the Canadian sector.”

Spectrum auction

Whether Trudeau lets Rogers hold the show’s spectrum license is one big issue. The other is whether to allow Shaw to participate in the 3,500 MHz radio spectrum auction in June. This is because the merger has not been approved by then.

“This is actively being considered for the best course of action under the circumstances of this proposed transaction,” Champagne said, referring to the auction. “That’s what we’re considering because the rules are in place for that particular auction.”

Champagne said his government is still urging carriers to further reduce wireless prices. In the 2019 campaign, Trudeau’s Liberal Party promised to take advantage of further regulatory threats to reduce the cost of wireless services by 25% within four years.

The government’s latest quarterly report on the matter states that wireless prices for most plans have fallen by 10% to 18% since early 2020.

“It reminds us of the telco every time I talk to them,” he said.

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Rogers show bids have “serious” competitive issues, Canada says