Case Documents

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THE COMPETITION TRIBUNAL

CT-2022-002

IN THE MATTER OF the Competition Act, R.S.C. 1985, c. C-34; AND IN THE MATTER OF the proposed acquisition by Rogers Communications Inc. of Shaw Communications Inc.;

AND IN THE MATTER OF an application by the Commissioner of Competition for one or more orders pursuant to section 92 of the Competition Act.

B E T W E E N:

COMMISSIONER OF COMPETITION - and –

Applicant

ROGERS COMMUNICATION INC. AND SHAW COMMUNICATIONS INC. Respondents - and -

THE ATTORNEY GENERAL OF ALBERTA and VIDEOTRON LTD. Interveners

RESPONDING MEMORANDUM OF FACT AND LAW OF ROGERS COMMUNICATIONS INC. (Bell and Telus’ Motions to Quash Subpoenas)

October 26, 2022

LAX O’SULLIVAN LISUS GOTTLIEB LLP 145 King Street West, Suite 2750 Toronto, ON M5H 1J8

Jonathan C. Lisus (LSO# 32952H) Tel: 416.598.7873 Email: jlisus@lolg.ca Crawford G. Smith (LSO# 42131S) Tel: 416.598.8648 Email: csmith@lolg.ca Matthew R. Law (LSO# 59856A) Tel: 416.849.9050 Email: mlaw@lolg.ca Bradley Vermeersch (LSO# 69004K) Tel: 416.646.7997

TO:

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Email: bvermeersch@lolg.ca Zain Naqi (LSO#: 67870U) Tel: 416.645.3789 Email: znaqi@lolg.ca

Counsel for the Respondent/Responding Party, Rogers Communications Inc.

THE COMMISSIONER OF COMPETITION Department of Justice Canada Competition Bureau Legal Services Place du Portage, Phase I 50 Victoria Street, 22nd Floor Gatineau, QC K1A 0C9

John S. Tyhurst Derek Leschinsky Katherine Rydel Ryan Caron Suzanie Chua Marie-Hélène Gay Kevin Hong Tel: (819) 956-2842 / (613) 897-7682 Fax: (819) 953-9267

Counsel for the Applicant/Responding Party, The Commissioner of Competition

AND TO:

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DAVIES WARD PHILLIPS & VINEBERG LLP 155 Wellington Street West Toronto, ON M5V 3J7

Kent E. Thomson (LSO# 24264J) Tel: 416.863.5566 Email: kentthomson@dwpv.com Derek D. Ricci (LSO# 52366N) Tel: 416.367.7471 Email: dricci@dwpv.com Steven Frankel (LSO# 58892E) Tel: 416.367.7441 Email: sfrankel@dwpv.com Chanakya A. Sethi (LSO# 63492T) Tel: 416.863.5516 Email: csethi@dwpv.com

Counsel for the Respondent/Moving Party, Shaw Communications Inc.

AND TO:

GOVERNMENT OF ALBERTA Justice and Solicitor General Government of Alberta 4th Floor, Bowker Building 9833-109 Street Edmonton, AB T5K 2E8

Kyle Dickson-Smith Tel: 780.644.4880 Email: kyle.dickson-smith@gov.ab.ca Opeyemi Bello Tel: 587.985.0564 Email: opeyemi.bello@gov.ab.ca

Counsel for the Intervenor, Attorney General of Alberta

AND TO:

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BENNETT JONES LLP 3400 One First Canadian Place Toronto, On M5X 1A4

John F. Rook Q.C. (LSO# 13786N) Tel: 416.777.4885 Email: rookj@bennettjones.com Emrys Davis (LSO# 57391B) Tel: 416.777.6242 Email: davise@bennettjones.com Alysha Pannu (LSO# 74369O) Tel: 416.777.5514 Email: pannuaa@bennettjones.com

Counsel for the Intervenor, Videotron Ltd.

AND TO:

BLAKE, CASSELS & GRAYDON LLP 199 Bay Street Suite 4000, Commerce Court West Toronto, ON M5L 1A9

Randall Hofley (LSO# 31633L) Email: randall.hofley@blakes.com Nicole Henderson (LSO# 56799K) Email: nicole.henderson@blakes.com Joseph McGrade (LSO# 73277P) Email: joe.mcgrade@blakes.com

Tel: 416 863 2400 Counsel for BCE Inc.

AND TO:

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OSLER, HOSKIN & HARCOURT 100 King Street West 1 First Canadian Place Suite 6200, P.O. Box 50 Toronto, ON M5X 1B8

Chris Naudie (LSO# 39596P) Email: cnaudie@osler.com Michelle Lally (LSO# 33337B) Email: mlally@osler.com Adam Hirsh (LSO# 55239Q) Email: ahirsh@osler.com Kaeleigh Kuzma (LSO# 55271B) Email: kkuzma@osler.com

Tel: 416 362 2111 Counsel for Telus Communications Inc.

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TABLE OF CONTENTS

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PART I - OVERVIEW .................................................................................................................. 1 PART II - SUMMARY OF FACTS ............................................................................................. 3 A. Bell and Telus Are Not Disinterested Observers .................................................. 3 B. The Commissioner’s Case on Videotron’s Ability to Compete ......................... 4 C. Bell/Telus Provide Witness Statements in Support of Commissioner’s Case ............................................................................................................................................. 6

i.

Bell’s Statements on Videotron’s Ability to Compete and Need for Wireline ................................................................................................................................. 6

ii. Telus’ Statements on Need for Wireline to Compete Effectively .................. 8 iii. Bell’s Statement Addresses Network Disruptions and Outages ................... 9 D. The Subpoenas Seek A Targeted Set of Documents ........................................... 9 E. Telus Has Identified a Handful of Responsive Documents .............................. 10 F. Bell Has Identified A Handful of Responsive Documents ................................ 13 PART III - STATEMENT OF ISSUES, LAW & AUTHORITIES ......................................... 14 A. The Subpoenas Seek Relevant and Probative Documents .............................. 15 B. No “End-Run” Around the Tribunal Rules and Processes ............................... 18 C. Requests Are Targeted and Scope of Responsive Documents Narrow ....... 21 D. The Commissioner’s Role on These Motions ...................................................... 23 E. Concerns about Commercial Sensitivity Are Not an Impediment .................. 24 F. The Tribunal May Direct When the Documents Are To Be Produced ............ 25 PART IV - ORDER REQUESTED ........................................................................................... 26

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PART I - OVERVIEW 1. Bell and Telus are two of the largest market participants in the wireless industry. They are and have been involved in the Commissioner’s review, investigation, and prosecution of this proceeding. They have engaged voluntarily. They have an extensive history of opposition to the proposed transaction. They made detailed written submissions with their counsel to the Commissioner which have, in large measure, shaped the Commissioner’s pleadings, expert evidence, and witness statements.

2. On September 23, 2022, the Commissioner served his affirmative evidence. Bell and Telus are central to his case. The Commissioner served four witness statements (two each) from Bell and Telus.

3. Bell and Telus have chosen to support the Commissioner on a key issue in this case: whether Videotron can effectively compete in markets where it does not own a wireline network. This assertion is ironic because Bell and Telus both have successful wireless businesses where they do not own wireline networks. Similarly, Rogers has no wireline network in the west and yet is a market leader in wireless. And 73% of Freedom Mobile’s subscribers are in Ontario where it has no wireline network. Bell’s witness statement also addresses network architecture and the July outages.

4. Rogers has issued focused subpoenas seeking Bell and Telus’ Board and ELT documents which address their real view of the effectiveness of Videotron as a wireless competitor and its need for a wireline network to effectively compete. In the case of Bell, Rogers also seeks documents concerning Rogers’ July network outage—which the

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Commissioner has made an issue, and the Tribunal has determined, relevant. None of the documents identified in the subpoenas were part of the Commissioner’s Affidavit of Documents. They could not have been asked for or pursued by Rogers. And it was months later that Bell and Telus chose to provide witness statements. There is no abuse of process here or “end-run” around the discovery process.

5. The evidence on cross-examination establishes that Telus has identified a discrete, organized collection of material that it concedes is responsive to the subpoena. This material consists of one board presentation of about 30 pages and several memoranda to ELT members consisting of about 100-110 pages. In total, Telus has identified no more than 140 pages of documents that are responsive to the subpoenas, probative of the issues, and readily available. No privilege is asserted. Bell has identified, to date, a handful of documents comprising about 30-40 pages of material.

6. Bell and Telus’ contemporaneous memoranda and presentations are the best evidence of their true assessment of the competitive threat posed by Videotron. They will show the significance, if any, Bell and Telus genuinely place on wireline assets as a competitive advantage for Freedom.

7. The Commissioner’s role on this motion deserves mention. This Tribunal has emphasized his role as an officer acting in the public interest and he is duty-bound to ensure the best available evidence is before the Tribunal. He has liaised with Bell and Telus at every stage of this proceeding, and his opposition now to the delivery of a focused set of documents highly probative of the matters in issue, and which he has not seen, is surprising.

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PART II - SUMMARY OF FACTS A. Bell and Telus Are Not Disinterested Observers 8. Bell and Telus’ opposition to this transaction is well-documented. Since Rogers and Shaw announced their agreement on March 13, 2021, Bell and Telus have pursued multiple avenues with regulators to advocate a complete block of the transaction. That opposition has been unchanged since the divestiture announcement on June 17, 2022.

9.

The statements of Bell and Telus to regulators reveal a determined effort

(a)

1

:

CTRC: In November and December 2021, the CRTC held hearings to review the transaction as it relates to the sale of Shaw’s broadcasting distribution business. Bell advocated that “[g]ranting approval to Rogers to acquire Shaw will have a transformative impact on the Canadian broadcasting system, one that would be highly detrimental overall.” 2 It urged the CRTC to “conclude that approval is not in the public interest and deny the Application outright” and that “denial … must be the only outcome.” 3

Telus claimed the transaction would “decrease competition, plurality of ownership, and the diversity of voices in the broadcasting system.” It said a denial was “the only course of action that is proportionate to the concerns raised.” 4

(b)

ISED: The Minister of Innovation, Science and Economic Development is charged with reviewing spectrum transfers. Bell and Telus have lobbied the Minister to deny them. As early as May 2021,

1 In addition to substantive submissions, Bell and Telus attempted to take advantage of litigation around the corporate control of Rogers to postpone the hearing of the CRTC’s Notice of Consultation 2021-281 – and with it, commercial certainty for Rogers and Shaw as competitors. 2 Bell Final Submissions to CRTC dated December 13, 2021, Affidavit of Ashley McKnight affirmed October 19, 2022 (“McKnight, Bell Affidavit”), Exhibit “N”, Responding Motion Record of Rogers Communications Inc. to BCE Inc.’s Motion to Quash Subpoenas (“RMR, Bell”), p.333. 3 Bell Intervention CRTC Hearing dated September 13, 2021, McKnight, Bell Affidavit, Exhibit “L”, RMR, Bell, pp. 316, 318. 4 Telus Submission to CRTC dated September 13, 2021, Affidavit of Ashley McKnight affirmed October 19, 2022 (“McKnight, Telus Affidavit”), Exhibit “J”, Responding Motion Record of Rogers Communications Inc. to Telus Communications Inc.’s Motion to Quash Subpoenas (“RMR, Telus”), p.149.

(c)

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Competition Bureau: Within weeks of the transaction being announced, Bell began a campaign to persuade the Commissioner to block it.

In addition to these submissions, Bell and Telus have had numerous meetings, consultations, and communications with the Commissioner’s staff and counsel over the past year-and-a-half. Most recently, as part of his section 92 application, the Commissioner asked, and Bell and Telus agreed, to provide witness statements in support of its case.

B. The Commissioner’s Case on Videotron’s Ability to Compete 10. The Commissioner’s case rests, in significant part, on the contention that Freedom under Videotron will struggle to compete as vigorously as it did under Shaw for a lack of wireline assets. This claim is foundational to his pleaded case and to the evidence he has led in support of his section 92 application.

5 McKnight, Bell Affidavit, Exhibit “I”, RMR, Bell, p.235. 6 Bell’s Submission to the Competition Bureau dated December 29, 2022, para. 87, McKnight, Bell Affidavit, Exhibit “J”, RMR, Bell, p. 276. 7 Ibid.

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11. The Commissioner alleges that “[s]evering Freedom Mobile from Shaw’s wireline business will substantially compromise its ability to compete and provide much-needed competitive discipline to the National Carriers.” As he pleads in his amended reply:

While Rogers pleads that the Proposed Transaction and the Divestiture would increase competition, as noted above, that is not the case, given factors which include Rogers’ different market position and incentives from Shaw and the difficulties and reduced competitiveness which Videotron will face without wireline assets and other benefits derived by Shaw from its wireline business. These factors make it likely that there will be increased post-merger coordination and reduced competition in Wireless Services. 8

12. On September 23, 2022, the parties exchanged witness statements and expert reports in-chief. The Commissioner’s economics and industry experts, Dr. Nathan Miller and Dr. Michael Davies, opine that Freedom will have less incentive and ability to compete without Shaw’s wireline assets. Bell and Telus’ witness statements directly engage and support this issue.

13. The respondents and Videotron dispute the Commissioner’s contention that wireline assets are essential to success in wireless. They have filed extensive fact and expert evidence in response to the Commissioner’s position. Videotron’s witness statements make clear that, in its considered business judgment, it has negotiated and secured all the assets it needs to compete effectively. The respondents’ experts have opined that wireline ownership is not necessary to the growth and competitive strength of a wireless business, citing a large body of technological and industry evidence.

8 Fresh as Amended Reply to Rogers, dated September 2, 2022, para. 17, McKnight, Bell Affidavit, Exhibit “C”, RMR, Bell, pp. 78-79, Rogers’ Compendium for Oral Argument (“Compendium”), tab 2, pp. 14-15.

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C. Bell/Telus Provide Witness Statements in Support of Commissioner’s Case 14. As part of his affirmative case delivered on September 23, the Commissioner led evidence from Bell and Telus:

(a)

(b)

Bell provided two witness statements, one from Blaik Kirby, its Group President, Consumer and Small & Medium Business and the other from Stephen Howe, its Chief Technology and Information Officer 9 ;

Telus provided two witness statements, one from Charlie Casey, its Vice President, Consumer and Controller and the other from Nazim Benhadid, its Senior Vice President, Network Build & Operate.

15. These statements were voluntary; they were not compelled by summonses. The Bell and Telus statements go to a fundamental issue in dispute: the divestiture of Freedom and its ability to compete under Videotron’s ownership.

i. Bell’s Statements on Videotron’s Ability to Compete and Need for Wireline 16. Mr. Kirby is the president of Bell’s wireless and wireline units. He leads the sales, marketing, and product development teams responsible for these businesses. In his statement, he espouses the Commissioner’s position on the need for wireline assets to succeed in wireless:

Without our wireline infrastructure and operations, Bell would not be as effective a wireless competitor as we are today. My experience in the Canadian telecommunications industry indicates that is true for all integrated wireless competitors in Canada, including Shaw/Freedom Mobile. For example, I have observed that Videotron’s position as an integrated wireless and wireline competitor in Quebec, leveraging tactics such as cross-selling wireless services and offering

9 The Commissioner also delivered a witness statement from Christopher Hickey, the Director, Regulatory Affairs at Distributel Communications Ltd, which is now owned by Bell.

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large multiproduct discounts, has been essential to its ability to succeed as a disruptive competitor in that province. 10

17. Mr. Kirby states that “a significant contributing factor to [Videotron’s] wireless results in the province of Quebec has been their ability to cross-sell wireless services to their large existing Internet subscriber base and to offer large multiproduct discounts.” 11 He claims that, if it is allowed to acquire Freedom, Videotron will not be able to compete as effectively as Shaw:

I do not expect that, if Videotron expands into other provinces, it could or would play the same large and disruptive role as it has done in Quebec, given that it will be very differently positioned. Rather, it is the combination of Shaw and Shaw Mobile that I would expect to play a more disruptive role in the market in Alberta and British Columbia. 12

18. Likewise, Mr. Howe, Bell’s Chief Technology and Information Officer, speaks to the “benefits for wireless network deployment associated with owning an extensive wireline access network in the same footprint”:

While our experience demonstrates that it is possible for an established national wireless operator to successfully deploy a wireless network outside an existing wireline network footprint, deploying in an area where we have such a footprint provides us with significant opportunities to reduce costs, reduce deployment timelines, and increase innovation. The same would be true for other companies,

10 Witness Statement of Blaik Kirby dated September 23, 2022 (“Kirby Statement”), para. 25, McKnight, Bell Affidavit, Exhibit “G”, Bell RMR, pp. 117-118, Compendium, tab 4, pp. 22-23. 11 Kirby Statement, para. 43, McKnight, Bell Affidavit, Exhibit “G”, RMR, p. 123, Compendium, tab 4, pp. 24-25. 12 Kirby Statement, para. 47, McKnight, Bell Affidavit, Exhibit “G”, RMR, p. 125, Compendium, tab 4, p.26.

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including Shaw (Shaw Mobile and Freedom), deploying a wireless network within their traditional wireline footprint. 13

ii. Telus’ Statements on Need for Wireline to Compete Effectively 19. Mr. Benhadid is a senior executive responsible for Telus’ wireless and wireline network build and maintenance. His evidence is also directed at the Commissioner’s position that wireline ownership is essential to competitiveness in wireless.

20. In his statement, Mr. Benhadid testifies that Telus “constantly competes for customers with Rogers, Bell, Shaw and others on the basis of network reliability and capability” and that “wireline network ownership is critical to wireless network performance and reliability.” 14 He states that the “quality, performance, and reliability of our wireless network is heavily dependent upon the quality, performance, and reliability of our wireline network” and stresses the benefits of “[o]wning [wireline] facilities (as opposed to leasing them).” 15

21. Both the Bell and Telus witnesses directly engage the competitive dynamics of the wireless business and the assets that a wireless carrier requires to effectively compete. Their evidence is in service of the Commissioner’s core narrative.

13 Witness Statement of Stephen Howe dated September 23, 2022, (“Howe Statement”), para. 10, McKnight, Bell Affidavit, Exhibit “H”, RMR, Bell, p. 137, Compendium, tab 5, pp. 28-29. 14 Witness Statement of Nazim Benhadid dated September 20, 2022, (“Benhadid Statement”), paras 4,9, McKnight, Telus Affidavit, Exhibit “I”, RMR, Telus, pp. 123, 126, Compendium, tab 7, pp. 39, 42. 15 Benhadid Statement, paras. 4-5, McKnight, Telus Affidavit, Exhibit “I”, RMR, Telus, pp.123-124, Compendium, tab 7, pp. 39-40.

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iii. Bell’s Statement Addresses Network Disruptions and Outages 22. On August 26, 2022, Chief Justice Paul Crampton heard a discovery-related motion and determined that “questions relating to network outages are relevant.” The statement of Mr. Howe weighs in directly on this issue. Mr. Howe testifies that:

In my experience, network resiliency is a critical element of network quality and a reduction in the resiliency of the networks serving customers – even if it is not experienced day to day but instead only when there is a problem – is a reduction in the quality of the services made available to them. The importance of network resiliency in competition between carriers, and the focus carriers place on it, is reflected in the fact that for many years carriers in Canada have competed to offer Canadian consumers and businesses the “most reliable” network. 16

D. The Subpoenas Seek A Targeted Set of Documents 23. On October 4, 2021, Rogers served the Bell and Telus witnesses with subpoenas for relevant documents. They invited discussions with counsel for Bell and Telus to narrow and clarify the scope of these requests. Bell and Telus refused. 17

24.

On October 13, 2022, Bell and Telus served these motions to quash.

25. Fresh subpoenas were served the next day to address Bell and Telus’ objections about scope—which could have been addressed earlier had they accepted the invitation to discuss. The fresh subpoenas are focussed and targeted.

16 Howe Statement, para. 15, McKnight, Bell Affidavit, Exhibit “H”, RMR, Bell, p.139, Compendium, tab 5, p. 30. 17 Letter from D. Ricci to counsel for Bell and Telus dated October 14 2022, Supplementary Affidavit of Daniel Stern dated October 17, 2022 (“Stern Supplementary Affidavit”), Exhibit “C”, pp. 20-21.

26.

27.

28.

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Rogers’ subpoena to the Telus witnesses seeks production of:

(a)

All memoranda or presentations dated on or after May 7, 2022, to Telus’ board of directors or executive leadership team considering the proposed divestiture of Freedom to Videotron. 18

Rogers’ subpoena to the Bell witnesses seeks production of:

(a)

(b)

All memoranda or presentations dated on or after May 7, 2022, to Bell’s board of directors or executive leadership team considering the proposed divestiture of Freedom to Videotron; and

All memoranda or presentations to Bell’s board of directors or executive leadership team on or after July 8, 2022, containing analysis of Rogers’ network outage that occurred on July 8, 2022. 19

The documents sought are not in the Commissioner’s Affidavit of Documents.

E. Telus Has Identified a Handful of Responsive Documents 29. In support of its motion, Telus filed affidavits from Daniel Stern, its Director, Regulatory Law and Policy. On cross-examination, Mr. Stern testified about the steps he took to gather responsive documents.

30. With respect to memoranda and presentations to the Board about the Videotron divestiture, he spoke with Andrea Wood, Telus’ Chief Legal and Governance Officer. Ms. Wood is the Secretary of the Board responsible for attending and taking minutes of all Board meetings. Mr. Stern testified that he gave Ms. Wood a copy of the subpoena and asked her for responsive documents.

18 Rogers’ subpoena to Telus Witnesses dated October 14, 2022, McKnight, Telus Affidavit, Exhibit “M”, RMR, Telus, pp.183-185, Compendium, pp. 7-9. 19 Rogers’ Subpoena to Bell Witnesses dated October 14, 2022, McKnight, Bell Affidavit, Exhibit “P”, RMR, Bell, pp.354-356, Compendium, pp. 10-12.

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31. Ms. Wood readily identified only two—a board package of approximately 30 pages and an email from Telus’ CEO, Mr. Darren Entwistle, to the Board:

Q. Well, Mr. Stern, I take it, sir, when you went to speak to Ms. Wood you gave her a copy of the summons, correct?

A. Yes. That's exactly what's making me think of this. I gave her the summons and she gave me documents in response. I can't remember exactly what they say, but, right, that's a good point. Summons asked for divestiture. I can't remember exactly what they say. I'm not trying to be difficult.

Q. Let's just establish the proposition. Ms. Wood is a lawyer and a Board secretary, correct?