On March 29, Joe Natale, Chairman of Rogers, responded to Ali Ehsassi’s questions and made some interesting statements.
For those of you who don’t know which is most of us, Ali is Liberal MP for Willowdale, Ont. Member of the Commons industry and parliamentary secretary for the industry.
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Rogers Communications proposed $26 billion buyout of Alberta-based Shaw Communications will not lessen competition. I was somewhat skeptical when I read this.
“The Canadian market is intensely competitive, and prices have been coming down dramatically over the last number of years,” testified Joe Natale, CEO of Rogers, “This is yet one more opportunity to combine for strength.”
Rogers, on March 15, said it would buy up Shaw in a transaction subject to federal approval under the Competition Act and Telecommunications Act. Shaw dominates cable service in the four Western provinces. The buyout would leave two large competitors, Bell and Telus.
It’s important to note that this deal is not to save Shaw communications from financial peril but to create efficiencies in the industry and deliver better service. This is a common ploy used by Canadian monopolies to circumvent the paper tiger that is the Canadian Competition Bureau.
“Obviously, a lot of Canadians are concerned,” said Liberal MP Ali Ehsassi (Willowdale, Ont.), parliamentary secretary for Industry. “Would you agree with me that less competition should very much concern Canadians?”
Image courtesy of Andrew Meade for The Hill Times
Below is where Joe Natale covers his but by invoking the efficiency and better service claim.
“I think the most important factor around competition is having strong players that have the ability to invest in the future with new technologies and new ideas,” replied CEO Natale.
MP Ehsassi: “Your company is pretty profitable, correct?”
CEO Natale: “I would agree that our company is very competitive and I would agree that –”
MP Ehsassi: “But it is profitable?”
CEO Natale: “It is profitable.”
MP Ehsassi: “So you would agree with me the reason why this acquisition is happening is not because you’re really hurting, you’re desperate, and you need to do these things to come up with savings, correct?”
CEO Natale: “This acquisition is about looking to the future, not the present.”
So again, if you missed it, there is no need for this to happen other than to reduce competition.
Image courtesy of mobilesyrup
The following stats were compiled by our friends at Blacklock’s Reporter concerning Rogers.
Rogers Communications reported a pre-tax net income of $2.2 billion last year. CEO Natale was paid $11.7 million in salary and benefits.
Shaw Communications executives, which stand to make out very well from this acquisition, testified there was no reason to believe fewer telecom competitors would raise prices. Canadians pay an average of $2,123 a year for telecom services, according to the latest CRTC Communications Monitoring Report.
“We believe Canada needs dynamic competition, not a magic number of competitors,” said Paul McAleese, president of Shaw Communications Inc.
“Do you believe a fourth carrier reduces prices?” asked Conservative MP Pierre Poilievre (Carleton, Ont.).
“I believe a dynamic, competitive environment reduces prices,” replied President McAleese.
“The question was, do you believe a fourth carrier reduces prices, yes or no?” asked MP Poilievre.
“It’s all situational,” replied McAleese.
“Will going from four to three equal ‘dynamic and competitive?'” asked MP Poilievre.
“I think it absolutely can,” replied McAleese.
CEO Brad Shaw testified the buyout would bring better telecom services. “The combination of these two companies will drive unparalleled investment as we go forward,” said Shaw.
“Isn’t this a net negative?” asked Liberal MP Nathaniel Erskine-Smith (Beaches-East York, Ont.). “We’re going to lose competition that has previously driven down prices.”
So after reading this far, I was somewhat curious why they don’t just come out and say it. We want to be bigger so we can pretend to compete with Telus and Bell and keep prices at some of the highest in the world.
“Listen, we all like to win,” replied Shaw’s CEO, “The competition with a stronger competitor in Canada will drive value and choice and innovation.” The preceding was the mantra they will present to the competition bureau.
Reporting and facts from Blacklock’s Reporter on March 30, 2021
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