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Summer Newsletter: The View from Under the Bus

On St. Patrick’s Day, 2017, BCE Inc. (Bell) completed its purchase of Manitoba Telecom Services Inc. (“MTS”).  The Competition Bureau made a deal to allow this. No surprise there.  They always do. Green beer and whiskeys for all!

The Commissioner of Competition has never taken a merger in the telecommunications industry in Canada all the way to the Competition Tribunal. So why should we expect them to start now?

Maybe because the Competition Bureau clearly concluded that Bell buying MTS would lead to a substantial lessening of wireless competition (in layman’s terms: go from 4 carriers to 3); allow the big three, Bell, TELUS and Rogers, to coordinate pricing and therefore substantially and indefinitely raise prices for wireless service in Manitoba; and lastly that there would not be, in fancy economic terms, a combined Bell/MTS “efficiency gain” greater than the loss of “consumer surplus”. Overall, on every competition measure, this was a bad deal.  Why then did the Competition Bureau not take this merger to the Competition Tribunal to rule on their concerns and to ask the Tribunal to block the merger?

There is no conceivable way that the consent order deal – the creation from whole cloth of a new retail wireless competitor from satellite internet provider Xplornet, even with 40 MHz of cast-off spectrum from Bell/MTS and just under 25,000 “starter” customers – can hope to challenge the behemoth that is Bell/MTS.  The consent order deal is a fig leaf over the shame felt by the Competition Bureau that it does not have the power to face down Canada’s largest communications company, no matter how dominant it becomes.

Bell lobbied hard for this deal. Bell representatives joyfully shared their relief that the deal finally made it through the consent order on the day it was made public. “We’re quite pleased,” said Mirko Bibic, Bell’s Executive Vice President & Chief Legal & Regulatory Officer. “Today is a very good day.” That is emotional language for Bell.

Speaking of emotion, we watched with fascinated horror as the Commissioner of Competition, John Pecman, struggled to find some way to justify this decision. Appearing on BNN (a Bell Media property) recently to discuss the Bell-MTS consent order, he threw consumers under the bus, purposely making a point of blaming consumers, saying they are “generally passive” and must “step up” to demand better deals.  His theory: that “negotiating” will reduce price coordination of the Big 3.

There no competition law authority in the world that measures competition on what a consumer may be able to “haggle” out of a company on an individual basis.  Public pricing is the measure of competition.  Most customers pay the price asked.  Non-transparent pricing always favours the service provider – consumers can’t compare offers.  Consumers instead expect a fair, public and transparent market, supposedly assured by the Competition Bureau, not a private grey market.

Even if this is an “innovative” approach to competition regulation, there is no reasonable prospect that such haggling would lower prices over the long term.  The big three, with virtually identical market shares and identikit services, will offer less and less advantageous deals to hagglers and challenge those who want a “deal” to leave.  If those customers leave, the big three will gain as many customers as they lose each month, in a perpetual game of musical chairs. They will not lower prices. Only a competitor like MTS was, strong regionally and not in the market position of the Big 3, will offer lower prices, at least in that region. But now they are gone.

The Public Interest Advocacy Centre, the Consumers’ Association of Canada and the Manitoba Public Interest Law Centre all worked hard to convince the Competition Bureau that the takeover of MTS by Bell would hurt customers and cost them more. We provided a survey of Manitobans that showed a majority were concerned (echoed by the Competition Bureau in their market analysis) that wireless and home internet prices would rise after the deal. We provided other evidence and argument directly to the Competition Bureau. We saw many of our points and arguments in the Competition Bureau market analysis.  What we didn’t do is lobby.  Oops.

Consumers, one day, will figure out that they are being had.  That this “Competition Bureau” thing is window dressing for corporations doing what they want in Canada, with a patina of government oversight. That they have been run over, once again, and are looking at the undercarriage of the bus.  But when they pick themselves up and brush themselves off, they might just use their expensive phone to make sure they have an MP that wants what they want: lower wireless prices.  And they will vote for it.

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