Videotron Ltd. would acquire Shaw’s Freedom Mobile – Canada’s fourth-largest wireless carrier – for $2.85-billion.
The telecoms, meanwhile, have argued that Freedom would be a stronger competitor in Videotron’s hands. During the final days of expert testimony, Mark Israel, a competition economist hired by Rogers, told the tribunal that if Videotron is permitted to acquire Freedom Mobile, the Quebec-based telecom will become a nearly national carrier with “strong economic incentives and assets to compete vigorously.” Those assets include a larger portfolio of spectrum licences.
The tribunal has also heard evidence about the potential cost savings, or efficiencies, that would result from the deal. Canadian competition law allows a merger to close if it generates lower total costs for the combined business, even if it lessens competition. Counsel for the Competition Bureau has attempted to challenge the telecoms’ calculations, noting, for instance, that Mr. Harington did not deduct the retention bonuses that will be paid to Shaw executives from the efficiencies. Those retention payments will cost the company up to $50-million.the merger.
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