Feds reject Rogers-Shaw deal, leave door open

OTTAWA — Industry Minister François-Philippe Champagne said he will not approve the proposed deal between Rogers Communications Inc. and Shaw Communications Inc., though he left the door open to a revised agreement.

The $26-billion proposed merger would have meant the wholesale transfer of wireless spectrum licences from Shaw to Rogers, which requires Champagne's approval.

“Today, I officially denied that request," he said Tuesday evening. “My decision formally closes that chapter of the original proposed transaction."

Shaw's ownership of Freedom Mobile has widely been seen as the main obstacle to the deal's approval, and Montreal-based Videotron earlier this year agreed to buy it for $2.85 billion.

But Champagne said before he would approve the Videotron deal, he requires additional concessions.

He said Videotron would have to agree to keep the Freedom wireless licences for at least 10 years.

"A new service provider needs to be in it for the long run," he said.

Secondly, he said he would "expect to see" wireless prices in Ontario and Western Canada lowered by about 20 per cent, putting them in line with Videotron's current Quebec offerings.

Champagne did not make clear whether a successful sale of Freedom Mobile would mean the Rogers-Shaw deal might be approved after all.

As well as Champagne's approval, the Rogers-Shaw deal requires a green light from the Competition Commissioner and the CRTC.

The Canadian Radio-television and Telecommunications Commission offered its conditional approval for the broadcasting portion of the deal in March.

The CRTC in March approved Rogers' acquisition of Shaw's broadcasting services, and laid out a series of conditions the company must meet. A mediation is scheduled for later this week between the Competition Commissioner and Rogers and Shaw.