TORONTO - Canada's competition watchdog will not challenge Bell Canada (TSX:BCE) and Rogers Communications Inc. (TSX:RCI.B) on their $1.07-billion takeover of Maple Leaf Sports and Entertainment, despite concerns about concentration in the industry, the regulator said Wednesday.
The Competition Bureau said it has issued a "no action" letter to the telecom giants indicating that 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 potential effects of the deal that would see Canada's largest telecom companies have control over content.
Critics of the deal, which is expected to close this summer, have raised questions about the effect of putting so much content in the hands of some of Canada's largest companies, fearing consumers will ultimately pay more.
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 bureau noted.
The legislation provides the bureau with a one-year period following the deal's closure to bring a challenge to the Competition Tribunal.
The two companies, fierce rivals in the delivery of cellphone and Internet services, teamed up on the billion-dollar bid for a majority stake in the country's biggest sports franchise company — owner of the NHL's Maple Leafs, the NBA's Raptors and the Toronto FC soccer club in December.
"The bureau's announcement means we are one step further in the process of closing the deal," Rogers spokeswoman Patricia Trott.
The deal is also subject to approval from the Canadian Radio-television and Telecommunications Commission and various sports leagues.
Rogers and Bell want to put sports content on everything from smartphones to tablets and televisions to personal computers so that fans don't miss any of the games. The move also gives them more access to advertising revenue.
But both companies have stressed they will compete on how they distribute the content.
"The acquisition secures on a long-term basis access to TV, mobile, digital online and radio broadcast rights for both Bell and Rogers to MLSE's sports teams," Bell said in a statement Wednesday.
"Bell's investment in MLSE is part of its strategy to deliver Canada's best content across world-leading broadband networks to any screen customers may choose."
Rogers already owns the Toronto Blue Jays baseball team and their stadium, the Rogers Centre, as well as the broadcaster Sportsnet.
Bell owns the CTV television network and specialty cable channels such as TSN sports channel and French-language cable channel RDS. Bell also has a minority ownership stake in the NHL's Montreal Canadiens.
Under terms of the deal, Rogers and Bell will pay the Ontario Teachers' Pension Plan about $533 million apiece for their respective 37.5 per cent chunks of MLSE. Minority owner Larry Tannenbaum, through his company Kilmer Sports, will boost his current stake in MLSE by five per cent to 25 per cent.
Rogers and Bell have put their differences aside before, when it comes to sports, teaming up to form a media consortium that brought viewers the 2010 Vancouver Olympics on Rogers Sportsnet channels and Bell-owned CTV and TSN.
In another move that has sparked competition concerns, BCE announced in March that it will buy specialty TV and radio station owner Astral Media (TSX:ACM.B) for $3.4 billion, bringing one of the few remaining independent broadcasters into a communications behemoth.
The move raised questions about whether regulators will allow the further shrinking of the number of players competing in Canada's media landscape.
The Astral deal will require approval from the Canadian Radio-television and Telecommunications Commission and a face a review by the Competition Bureau.