Rogers’ bid for Shaw gets boost after court rejects antitrust effort to block deal

TORONTO, Jan 24 (Reuters) – A Canadian court on Tuesday dismissed the competition bureau’s effort to block Rogers Communications Inc’s ( RCIb.TO ) C$20 billion ($14.9 billion) bid to buy Shaw Communications Inc ( SJRb.TO ) , in a boost to block the companies’ efforts to close a deal that was struck nearly two years ago.

“It would be senseless to send this case back to the competition court for a new decision,” Justice David Stratas told the court, calling many of the lawsuits raised by the antitrust agency “without merit.”

The proceeding in a Federal Court of Appeal in Ottawa was the latest attempt by the antitrust office to kill the deal, saying the transaction would harm competition in the telecommunications industry in Canada, where consumers face some of the highest cell phone bills on the world pay.

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Rogers and Shaw shares jumped on the decision, and both traded up 3% in late afternoon trading, while the benchmark Canadian stock index (.GSPTSE) was lower.

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 swathes of business.

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

Shaw and Rogers intend to finalize the deal by January 31, although the deadline may be extended in agreement with Quebecor.

Industry Minister Francois-Philippe Champagne, who has the final say on the transaction, said in a statement later on Tuesday that he would review the court ruling on the deal and that competition and affordability in the telecommunications sector remained a top priority .

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The National Bank of Canada analysts said in a note last week that the bureau could also appeal to the Supreme Court and 60 days to do so.

But they noted that such a move must first be reviewed by a committee of senior members in the Justice Department, who usually try to avoid sending what they consider low-merit cases to the top court.

The judges grilled competition office lawyers in the morning on their case against the transaction and delivered their verdict in the afternoon without hearing from Rogers and Shaw.

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The bureau previously failed to convince the Competition Tribunal, a quasi-court that handles merger disputes, that the deal is harmful to Canadian consumers. It was approved on December 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 pretty conclusively that there was no substantial lessening of competition.

“They also found a number of pro-competitive considerations.”

The Competition Bureau of Canada, Rogers Communications and Shaw Communications did not immediately respond to a Reuters request for comment.

Reporting by Maiya Keidan in Toronto, additional reporting by Mehta Chavi and Ismail Shakil; Editing by Denny Thomas, Mark Porter and Deepa Babington

Our standards: The Thomson Reuters Trust Principles.

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