Request for Information: Rogers Communications Inc. / Shaw Communications Inc.

September 2021

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Purpose

About the Competition Bureau’s Request for Information

The Competition Bureau (Bureau) is an independent law enforcement agency that has the power to bring matters before the Competition Tribunal or the courts, where it believes that the Competition Act has been contravened. In order to arrive at such a conclusion, the Bureau conducts a thorough examination of the facts. The determination of whether a merger contravenes the Competition Act rests with the Competition Tribunal or the courts.

A public Request for Information provides an opportunity for all interested parties to provide information to advance the Bureau’s examination of the facts relating to its investigation. While the Bureau contacts a broad cross section of market participants as part of all complex merger investigations, it will not always be practical or possible to contact a comprehensive set of interested stakeholders through proactive outreach. This Request for Information offers the opportunity to such stakeholders to bring information to the Bureau’s attention.

A Request for Information published by the Bureau is not a final decision about a proposed merger and does not present the Bureau’s conclusions in respect of a particular proposed merger, but provides the Bureau’s areas of investigation that may benefit from information from market participants and Canadians.

About the Bureau’s merger review process

The goal of a merger investigation is to obtain the necessary evidence for careful analysis and consideration before reaching a conclusion as to whether a merger is likely to prevent or lessen competition substantially.

As part of the Bureau’s normal approach in examining a complex merger, the Bureau seeks information from a wide range of industry participants, such as suppliers, competitors, industry associations, customers and industry experts to inform its consideration of many different factors, including, the definition of the relevant market and the level of concentration and remaining competition in the market.

When a merger is likely to prevent or lessen competition substantially, the Bureau can attempt to negotiate an agreement to resolve competition concerns with the merging parties without proceeding to litigation before the Competition Tribunal. This approach enables a less costly and faster resolution of the matter where possible.

Where a consensual resolution is not possible, the Bureau will not compromise its responsibility to preserve competition in the marketplace. If the Bureau determines that a merger is likely to substantially affect competition, it may apply to the Competition Tribunal for an order to prevent, dissolve or alter the merger.

It is difficult to determine in advance how long a particular merger review will take to complete as the Bureau evaluates the steps that need to be taken on a case-by-case basis. On all reviews that it conducts, the Bureau works with merging parties to complete its reviews as expeditiously as possible.

The Bureau is required by law to conduct its work confidentially and therefore cannot share information regarding the status of a review including anticipated timing for a particular review.

About the Bureau’s review of the Rogers/Shaw merger

On March 15, 2021 Rogers Communications Inc. (Rogers) announced that it is proposing to acquire Shaw Communications Inc. (Shaw) (the Proposed Acquisition). The Bureau is currently investigating whether the Proposed Acquisition is likely to result in a substantial lessening or prevention of competition for services provided by the companies, including mobile wireless, wireline and broadcasting services.

As part of its investigation, the Bureau invites interested parties to submit information to assist in its assessment of the potential competitive impacts of the Proposed Acquisition. This Request for Information identifies areas in which the Bureau is seeking information to advance its investigation. However, the Bureau remains open to considering additional information. Depending on the volume of information received, the Bureau may not be able to respond to each interested party but the information received will be thoroughly reviewed and considered.

The Bureau’s investigation of the Proposed Acquisition is ongoing and no conclusions have been reached at this time.

Overview of the topics on which the Bureau is seeking information

Provision of mobile wireless services

Rogers provides mobile wireless services, including pre-paid and post-paid plans to consumers across Canada, under the Rogers, Fido, and Chatr brands. Shaw provides mobile wireless services, including pre-paid and post-paid plans to consumers in parts of BC, AB and ON under the Shaw and Freedom brands. Rogers and Shaw compete directly to provide mobile wireless services in parts of BC, AB, and ON.

The Bureau seeks information from interested parties to advance its investigation of mobile wireless services with a view to determining whether the Proposed Acquisition is likely to substantially prevent or lessen competition in mobile wireless services. In particular, interested parties may wish to provide information on the following topics, as they relate to the provision of mobile wireless services:

• The impact of the Proposed Acquisition on price, quality of service, promotions, or any other variable on which providers compete.
• How, and the extent to which, each of Rogers and Shaw react to each other and other competitors in terms of pricing, quality of service, promotions, or any other variable on which providers compete.
• The impact of Shaw’s (Freedom Mobile) recent expansion and network investments on price, quality of service, promotions, or any other variable on which providers compete.
• The impact of recent entry or expansion by any mobile wireless provider in Canada on price, quality of service, promotions, or any other variable on which providers compete.
• Any variation in prices, quality (including network quality), product offerings, and promotions among different regions of Canada (e.g. Eastern Canada and Western Canada).
• How competitive dynamics among mobile wireless providers in Canada may be impacted by the Proposed Acquisition, including with regard to existing network sharing relationships in the marketplace or dynamic competition as new products and technologies come to market.
• The importance of 5G for future competition in mobile wireless services, and the possibility for new products or technologies to be enabled by 5G.
• The interplay between wireline and wireless networks and how this is evolving with the advent of 5G.
• The extent to which consumers are able to reduce spending on mobile wireless services or substitute to alternative products and services in the event of a price increase.
• Any differential impacts of higher prices or reduced options for mobile wireless services on particular groups of consumers or businesses (e.g. Canadians or Canadian businesses in rural areas, low income groups, etc.), or any differential impacts of lower prices or greater choice on these groups.
• The impact the proposed changes to the regulation of mobile wireless services, including TRP CRTC 2021-130^{Footnote 1}, may have on the competitive landscape of wireless markets in Canada.
• The potential impacts of expanded wireless network capacity on a provider’s ability or incentives to compete for additional customers.

Competition for consumer and small business internet services

Rogers and Shaw both provide wireline internet services to consumers and small businesses. Rogers’ and Shaw’s wireline internet services are offered mainly in Eastern Canada and Western Canada, respectively.

The Bureau seeks information from interested parties to advance its investigation of wireline internet services. In particular, interested parties may wish to provide information on the following topics, as they relate to the provision of wireline internet services to consumers and small businesses:

• The impact of the Proposed Acquisition on price, quality of service, promotions, or any other variable on which providers compete.
• Any variation in prices, quality, product offerings, and promotions in the provision of wireline internet services among different regions of Canada (e.g. Eastern Canada and Western Canada).
• The ways and extent to which wholesale wireline providers (also referred to as Third Party Internet Access providers) compete for consumers and small business customers.
• The impact of 5G wireless home internet services in jurisdictions where such services have been introduced.
• The extent to which consumers are able to reduce spending on wireline internet services or substitute to alternative products and services in the event of a price increase.
• Any differential impacts of higher prices or reduced options for wireline internet services on particular groups of consumers or businesses (e.g. Canadians or Canadian businesses in rural areas, low income groups, etc.), or any differential impacts of lower prices or greater choice on these groups.

Competition for transport services

Wireline network operators may offer intra-city or inter-city fibre transport services on their networks to companies offering wireline internet services or to business customers. Rogers and Shaw both operate wireline networks across many regions in Canada.

The Bureau seeks information from interested parties to advance its investigation of the impact of the Proposed Acquisition on fibre transport services. In particular, interested parties may wish to comment on the following:

• The options available for wireline service providers for the provision of fibre transport services in different regions of Canada, including for wireless backhaul.
• Any relevant regulations relating to fibre transport services and the effectiveness of these mechanisms.
• Any factors, other than price, that can be influenced by wireline network operators in the provision of wholesale access to competing wireline internet providers.
• The potential impact of the Proposed Acquisition on competition for the supply of transport services, and the potential reactions of other market participants.

Downstream competition among BDUs and other content viewing platforms

The traditional television industry is broadly composed of three types of activities:

1. production (the creation of content),
2. aggregation (the amalgamation of content into programming channels), and
3. distribution (the delivery of programming channels to consumers).

At the distribution level, Broadcasting Distribution Undertakings (BDUs) compete against one another for the provision of television services via cable, fibre, telephone line, or satellite. Rogers provides wireline television services under its Ignite TV brand. Shaw provides wireline cable television services and also provides satellite television services under its Shaw Direct brand. Geographic overlap between Rogers’ and Shaw’s television services arises only in regions where Shaw offers only satellite television services; there is no geographic overlap in respect of Rogers’ and Shaw’s wireline television services.

In addition to, or in lieu of the services offered by BDUs, consumers may also spend time watching other content delivered via an internet connection such as subscription platforms (e.g. Netflix, Sportsnet Now), or ad-supported platforms (e.g. YouTube, CTV.ca). Such services are collectively referred to as Over-The-Top (OTT) platforms. The availability of OTT services may be a contributing factor in subscriber attrition from BDU services (referred to as “cord cutting” or “cord shaving”). Figure 1 depicts the relationship between the various parties involved in the creation, aggregation, and distribution of programming content.

• Figure 1: Relationships between the various parties involved in the creation, aggregation, and distribution of programming content

  There are various parties involved in the creation, aggregation, and distribution of programming content. The principal parties are producers, programming undertakings (or PUs), broadcast distribution undertakings (or BDUs), relay distribution undertakings (or RDUs), over-the-top platforms (or OTTs), and consumers. Producers are the creators of content, such as shows or movies. PUs acquire content and aggregate it into one or multiple television channels. BDUs aggregate television channels or OTT services into packages that are sold to end consumers. RDUs are owners of satellite or wireline infrastructure that facilitates the connection between PU channel feeds and BDUs. Typically, RDUs also offer BDU services to end consumers, and RDU services will only be required by BDU services that do not have this capability themselves. OTTs aggregate content into a digital library that is accessible through the internet and can be made available direct to consumers or through a BDUs services. Finally, consumers are the viewers or subscribers of content. There are many interrelationships amongst these parties as part of the delivery of content to consumers. Producers could supply content to both PUs and OTTs. PUs could provide content to both BDUs and OTTs. RDUs receive channel feeds from PUs and provide them to BDUs. As noted above, BDUs and OTTs deliver aggregated content to consumers, though in certain cases, consumers may receive OTT content through a BDU.

Rogers, through its subsidiary Rogers Media Inc. (Rogers Media), provides programming services as a Programming Undertaking (PU). In addition to distributing programming services through Rogers’ BDU, Rogers Media sells distribution rights to other Canadian BDUs, including Shaw.

The Bureau seeks information from interested parties to advance its investigation of downstream broadcasting services. In particular, interested parties may wish to comment on the following in respect of the provision of BDU Services:

• The impact of the Proposed Acquisition on television subscription prices, quality of services, or any other variable on which BDUs compete.
• Any impacts from the vertical integration of Rogers’ PUs with Shaw’s BDU and wireline infrastructure, including in respect of operating efficiencies created by the integration or incentives toward competitors that are created or augmented by the integration.
• The ability of CRTC regulations or other governing bodies to prevent a vertically integrated entity from: (1) limiting third party BDUs from distributing its programming services, or (2) raising the costs of programming for competitors to its downstream BDU.
• How, and the extent to which, any other technological innovations (e.g. 5G, ATSC 3.0, etc.) will impact future competitive dynamics and consumer habits regarding content viewing.
• The ways and extent to which wholesale wireline providers (also referred to as Third Party Internet Access providers) compete for the provision of BDU services.
• The evolution of Canadians’ content viewing habits (for example with the advent and evolution of OTT services), how this has impacted and will impact BDUs in the future.
• The degree to which consumers are able to reduce their spend on television services or substitute to alternative products and services in the event of a price increase.
• Any differential impacts of higher prices or reduced options for television services on particular groups of consumers or businesses (e.g. Canadians living in rural areas, low income groups, etc.), or any differential impacts of lower prices or greater choice on such groups.

Competition for carriage on BDUs and OTT platforms

PUs compete against one another for subscription revenue (via licensing agreements with BDUs) and advertising revenue (via the sale of commercial time slots). PUs purchase programming from producers or produce their own programming, and aggregate that programming into a channel. PUs then enter into agreements with BDUs and OTT platforms for carriage of their channel. These licensing agreements are generally non-exclusive. PUs can offer a range of programming, including news, live sports, shows, or other specialty content.

Rogers Media offers sports media, conventional channels, and specialty channels, including Sportsnet, CityTV, OMNI, FX, and OLN.

PUs are often grouped by BDUs into packages, or sold individually, and consumers are able to subscribe to multiple PUs through their BDU (or possibly through an OTT platform). Rogers’ BDU distributes programming acquired from Rogers Media, and other Canadian or international PUs.

The Bureau seeks information from interested parties to advance its investigation of upstream broadcasting services. In particular, interested parties may wish to provide information on the following:

• The impact of the Proposed Acquisition on programming licence prices, the quality of content, the availability of content to consumers, or any other variable on which PUs compete, including any impacts from the vertical integration of Rogers’ PU with Shaw’s BDU and wireline infrastructure.
• The ability of CRTC regulations or other governing bodies to prevent a vertically integrated entity from limiting the access of competing third party PUs to subscribers of the vertically integrated entity’s BDU division.

Provision of RDU services

PUs purchase programming from producers or produce their own programming, and aggregate that programming into a channel. PUs then enter into agreements with BDUs and OTT platforms for carriage of their channel. In order to distribute a PU’s channel, a BDU must have access to the PU’s feed via a wireline or satellite connection. If the BDU does not have a direct wireline or satellite connection to the PU’s feed, another BDU with the feed can act as a Relay Distribution Undertaking (RDU). An RDU is an intermediary distributing these programming services to other BDUs that lack direct access to the feed. Via an RDU connection, these BDUs can then retransmit the PU’s feed to their own television customers. While Rogers and Shaw primarily provide wireline BDU services in different geographic regions, they may enable third-party BDU competition in each other’s territories through the provision of RDU services.

The Bureau seeks information from interested parties to advance its investigation of RDU services. In particular, interested parties may wish to comment on the following:

• Whether the entities offering RDU services vary geographically across Canada and the sufficiency of the options available in different regions.
• Whether BDU options vary geographically across Canada and the alternatives available in different regions.
• Whether Rogers’ acquisition of Shaw’s RDU services may change the merged entity’s relationships and incentives towards BDUs that Rogers and Shaw currently provide RDU services to.
• The role and the impact of CRTC regulation or other governing bodies in respect of the relationship between RDU service providers and their BDU clients.

How to make a submission to the Bureau

The Bureau encourages all those with relevant information to confidentially share their information or experiences with the Bureau by October 29, 2021. Please provide information requested in all relevant fields of the web-form, including all necessary rationale and supporting evidence Any information provided to the Bureau is treated as confidential pursuant to Section 29 of the Competition Act.^{Footnote 2} The Bureau’s information bulletin on the communication of confidential information under the Competition Act can be found on its website.

Glossary

5G mobile technology

5G mobile technology refers to fifth generation wireless technology

ATSC 3.0

refers to a set of broadcast standards, also known as NextGen TV, developed by the Advanced Television Systems Committee for digital television transmission over terrestrial, cable and satellite networks

Backhaul

Backhaul refers to the infrastructure used to connect wireless cell sites to one another and the core network, including but not limited to fibre and microwave connections

Bell

Bell is a Canadian telecommunications company that provides wireless and wireline services as well as media offerings.

• Bell provides wireless services under its Bell, Lucky Mobile, and Virgin Mobile brands
• Bell and Telus have a network sharing agreement that operates across Canada.
• Bell provides wireline services under its Bell, BellAliant, BellMTS, Fibe, NorthwesTel, and Virgin Mobile brands, as well as Bell Satellite TV
• Bell media offerings include sports (including TSN and RDS), television & streaming, radio & podcasts, creative solutions, and out of home services.

BDU

A Broadcast Distribution Undertaking is a business that sells linear video content to subscribers via wireline or direct-to-home satellite. A BDU can generally be thought of as a seller of television channel bundles

Cord Cutting/Cord Shaving

The practice of partially or completely replacing cable TV packages with broadband connections and/or streaming services.

MVNO

A Mobile Virtual Network Operator or a wireless service provider that does not own the wireless network over which it provides services to its customers

OTT

An Over-The-Top platform is an entity that transmits content directly to a Person without the content being transmitted or licensed through a Distribution Undertaking. Examples of OTT platforms include Netflix, Amazon Prime, and Disney+

PU

A Programming Undertaking is an undertaking for the transmission of programs, either directly by radio waves or other means of telecommunication or indirectly through a distribution undertaking, for reception by the public by means of broadcasting receiving apparatus. A PU can generally be thought of as a television channel

RDU

A Relay Distribution Undertaking is an entity that provides distribution services to another distribution undertaking for purposes of that distribution undertaking retransmitting to end consumers

Rogers

Rogers is a Canadian telecommunications company that provides wireless services, cable wireline and media offerings.

• Rogers offers wireless services under its Rogers, Chatr, and Fido brands
• Rogers provides high-speed internet, cable television, and phone services
• Rogers media offerings include Sports (including Sportsnet), television & streaming, radio & podcasts, creative solutions, and out of home services.

Shaw

Shaw is a Canadian telecommunications company operating in the wireless and wireline segments.

• Shaw offers postpaid and prepaid wireless services through its Shaw Mobile and Freedom mobile brands
• Shaw’s consumer wireline services include broadband internet, Shaw Go WiFi, Video, and traditional home phone services
• Shaw provides business customers with internet, data security, WiFi, and phone services.

Telus

Telus is a Canadian telecommunications company that provides wireless and wireline services.

• Telus provides wireless services under its Telus, Koodo, and Public Mobile brands
• Telus and Bell have a network sharing agreement that operates across Canada
• Telus provides high-speed internet, wireline television and home phone services.

Transport services

Transport services refer to point-to-point telecommunication service between two locations which can be intra-city (within a city), inter-city (between two cities), or inter region (between two regions)

TRP 2021-130

TRP 2021-130 refers to the Telecom Regulatory Policy CRTC 2021-130 issued by the CRTC on April 15, 2021 relating to its review of mobile wireless services (CRTC 2019-57)

Wholesale wireline access

Wholesale wireline access refers to the provision of wireline services to a service provider for the purpose of resale

Wireless networks

Wireless networks refer to the infrastructure use to provide wireless services Wireless services

Wireless services

Wireless services refer to the provision of mobile communication services including voice, text, data, mobile broadband internet, and applications to consumers and business users of mobile devices

Wireline networks

Wireline networks refer to the infrastructure use to provide wireline services Wireline services

Wireline services

Wireline services refer to any wireline telecommunications service including voice services (i.e. telephone), data services, television, internet access, or bundlesThis section break marks the end of the document and should not be removed

How to contact the Competition Bureau

Anyone wishing to obtain additional information about the Competition Act, the Consumer Packaging and Labelling Act (except as it relates to food), the Textile Labelling Act, the Precious Metals Marking Act or the program of written opinions, or to file a complaint under any of these acts should contact the Competition Bureau's Information Centre:

Web site

www.competitionbureau.gc.ca

Address

Information Centre
Competition Bureau
50 Victoria Street
Gatineau, Quebec
K1A 0C9

Telephone

Toll-free: 1-800-348-5358
National Capital Region: 819-997-4282
TTY (for hearing impaired) 1-866-694-8389

Facsimile

819-997-0324