Incumbent operator BCE, also known as Bell, has been dealt a blow after Canada’s Industry minister said the government would not intervene to overturn a decision to block the telco’s C$3.38bn (US$3.41bn) deal to acquire Astral Media.
On 18 October…
Incumbent operator BCE, also known as Bell, has been dealt a blow after Canada’s Industry minister said the government would not intervene to overturn a decision to block the telco’s C$3.38bn (US$3.41bn) deal to acquire Astral Media.
On 18 October the Canadian Radio-television and Telecommunications Commission (CRTC) barred BCE from buying the Quebecois media business under the Broadcast Act, saying it was not in the best interests of Canadians.
Industry minister Christian Paradis said yesterday that while the law allows the government to intervene and overturn the regulator’s ruling, it doesn’t have any intention of doing so, according to the Financial Post.
Paradis reportedly said that a decision on the merger was up to the CRTC because it was under its jurisdiction and therefore there was no need for the government to intervene.
Following the CRTC’s decision BCE had appealed to the government, calling on Ottawa to issue a policy directive urging the CRTC to reverse its ruling.
However, according to a Canadian antitrust lawyer, the government cannot force the CRTC to change its decision, only suggest that it does.
BCE could now take the CRTC’s decision to court to attempt to get it overturned. However, according to the lawyer it is unlikely that BCE would pursue this course of action as the courts rarely overturn this sort of regulatory decisions.
Canada’s broadcast policy is based on ensuring the country has a ‘diversity of voices’, which is based on a variety of cultural and social policy objectives. One of the CRTC’s concerns during the five-day-long hearing was that if BCE acquired any more assets it would have too dominant a voice in the market.
BCE outlined a package of proposed remedies in July which included divesting 10 radio stations. However, it was not significant enough to move the CRTC.
Frost & Sullivan analyst Ronald Gruia, speaking to TelecomFinance, blamed the companies for failing to secure regulatory clearance, suggesting they should have offered further divestment remedies.
“It’s not the CRTC’s job to tell them how to get the deal through.”
Gruia said that the regulatory environment had changed in Canada under the Conservative government, with the laissez-faire attitude of the past replaced by a movement towards more consumer-focused policy.
“The CRTC is taking a more aggressive stance on hot buttons issues,” he said.
Last week BCE and Astral together extended the closing date of the potential deal to 16 December, and have the option to extend it further to 15 January 2013.
BCE agreed to purchase Astral Media in March.
BCE has a variety of holdings in broadcast services, including a national broadcasting distributor. It is also the largest ISP, the second largest wireless service provider and the third largest television distributor.
The CRTC was reluctant to give the company any more size and scale.
