The federal Competition Bureau says it has some concerns about the $1.07-billion takeover by BCE and Rogers Communications of Maple Leaf Sports and Entertainment, but will not challenge it.
In a release Wednesday, the competition watchdog said it has told the two giant telecoms it doesn't plan to have the deal reviewed under the Competition Act.
However, it added that it has heard several serious concerns about the effect of increasing concentration and vertical integration on the broadcasting industry.
It says the Commissioner of Competition is actively reviewing those concerns and won't hesitate to take action if she determines the Competition Act has been violated.
The legislation provides the bureau with a one-year period following the deal's closure to bring a challenge to the Competition Tribunal.
The media conglomerates teamed up on the bid for a majority stake in MLSE, the country's biggest sports franchise company, in December, saying they would each pay current owner the Ontario Teachers' Pension Plan about $533 million for a 37.5 per cent chunk of the company.
Through his company Kilmer Sports, minority owner Toronto businessman Larry Tanenbaum will boost his current stake in MLSE by five per cent to 25 per cent, bringing the total value of the company to just shy of $2 billion.
MLSE owns the Leafs of the NHL, the NBA's Toronto Raptors, Major League Soccer's Toronto FC, the Toronto Marlies of the AHL and the Air Canada Centre.
Sports content at heart of deal
The deal helps slake the telecom giants' thirst for sports content to broadcast on screens of all sizes.
The two rivals have put their differences aside before, teaming up to form a media consortium that brought viewers the 2010 Vancouver Olympics on Rogers Sportsnet channels and Bell-owned CTV and TSN.
Both Rogers and Bell have declared the deal a victory for sports fans and one that will keep the company in Canadian hands.
Rogers already owns the Toronto Blue Jays baseball team and their stadium, the Rogers Centre, as well as the broadcaster Sportsnet.