Abridged transcript of In camera session

Volume: 1
Location: Gatineau, Québec
Date: November 22, 2021
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Attendees and Location

Held at:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Québec

Attendees:


Table of Contents

Discussions


Transcript

Gatineau, Quebec

--- Upon commencing on Monday, November 22nd, 2021 at at 12:42 p.m./ L'audience débute le lundi 22 novembre 2021 à 12 h 42

  1. THE HEARING SECRETARY:  So Mr. Chairman, just before we begin, we will make sure that everything is closed and that we are not streaming, that all audio in the rooms behind us are shut down and we have confirmation about that.
  2. So I would ask you again to please make sure that all electronic devices are shut down.
  3. And Mr. Chairman, we are now ready to proceed with the in camera session.
  4. THE CHAIRPERSON:  Thank you, Madam Secretary.  Thank you for rejoining us for this hopefully brief session.
  5. Not surprisingly, you'll understand that we hope to get a sense of what is going on with the Competition Bureau, as obviously their review of the proposed transaction could result in changes that, in turn, could have impacts on the Commission's consideration of your application.
  6. So I won't go into a lengthy introduction but, rather, move to the pith and substance, if you will, of the issue.
  7. Would it be possible for you to provide us with an update on the process in front of the Bureau as it stands?
  8. MR. WOODHEAD:  Dean will take this one.
  9. MR. SHAIKH:  Well, as you know, the Competition Bureau governs itself by the Competition Act, which includes, under section 29, confidentiality provisions, so while respecting this is an in camera session, we want to respect the integrity and confidentiality of that process as well, which means we will say very little, although the parties, Rogers and Shaw, are diligently working towards seeking regulatory approvals as expeditiously as possible.
  10. THE CHAIRPERSON:  Well, without specifics, could I ask you if there have been any discussions to this point with the Bureau on proposed remedies to any possible lessening of competition, other negotiations on remedies under way?
  11. MR. SHAIKH:  That's in the category of a subject matter that I wouldn't discuss because I'd respect the Bureau's process.
  12. THE CHAIRPERSON:  I'm trying to figure out how to ask a question that you might be able to answer, in that case.
  13. What I want to ask you, and I think you're going to give me the same answer, is whether or not, if any remedies are being considered by Rogers, would they and could they have an impact on the value of the transaction as proposed?
  14. MR. SHAIKH:  Well, I will say that Rogers is seeking approval of the transfer of all of the assets of Shaw Communications in front of every regulator, and that's the extent I feel comfortable answering that question.
  15. THE CHAIRPERSON:  This could be shorter than I imagined.
  16. Would they — well, I guess you've answered this.  I was going to ask you if there was a potential for any remedies that might be negotiated with the Bureau or imposed by the Tribunal involving or addressing broadcasting assets or assets used to carry on the broadcasting undertakings, but given that you just said it comprises 100 percent of the assets, I guess that's a rather circular question and been answered.
  17. I guess, then, and I might turn to legal counsel after this, obviously if there is a remedy or remedies negotiated with the Bureau or imposed by the Tribunal and if such remedies or proposals became known after the Commission rendered its decision on a transfer of control or ownership, they could still have an impact on the value of the transaction.
  18. I guess is your closing date — I mean, what does this mean or what are the implications, I suppose, for potentially the Commission being unable to render a decision by the 15th of March, 2022 date?
  19. MR. SHAIKH:  All parties, Rogers and Shaw, are diligently working toward that March 15th closing date, and that involves regulatory approvals well in advance of March 15th, and that's our objective.
  20. MR. JOHNSON:  And that would be with respect to each of the regulators.
  21. THE CHAIRPERSON:  Understood.
  22. Sorry.  I'm pausing because, needless to say, most of the information that I or we, I should say, are looking for you're not able to share.
  23. I think I will turn to Commission counsel, if I may, if you have a suggestion for a different way of perhaps asking a question that might engender further response.
  24. MS. MAHEUX:  I would ask various question because I understand that [indiscernible/indiscernable] will imply the broadcasting asset, so if it's so, this could require the filing of an amended application if it's known before our decision is rendered, so this also leads to delaying the timeline in the timeline decision.
  25. And as you know, the Commission determined the value of the transaction and, thus, the value of the tangible benefit.  The Commission aims to ensure that the process is predictable and consistent regardless of the structure of the transaction.
  26. In light of this objective, the practice of the Commission is to establish the value and the amount of tangible benefit in the decision without requiring additional follow-up process.
  27. So in the event that remedies negotiated with the Bureau or imposed by the Competition Tribunal become known after the Commission has rendered a decision on the transfer of control and ownership but these remedies have an impact on the value of the transaction, the Commission will not revisit its value of the transaction as determined by the Commission in its decision.
  28. So do you understand that the subsequent change of the value of the transaction as a result of a Competition Act remedy will not likely cause the Commission to revisit its valuation of the transaction?
  29. MR. WOODHEAD:  #                    #.
  30. MS. MAHEUX:  And if the Competition Bureau decision became known before our decision, would you agree to file an amendment application if it's required?
  31. MS. DAMIANI:  #                                                      #
  32. MS. MAHEUX:  Because — because of the valuation.  If it's — depending on — because it's purely speculative at this moment, so that could be licensed and that could be exempt or that could be services under licence, so that might change the value of the transaction considerably.
  33. MR. SHAIKH:  #                                                                                                                                              #
  34. #                                                                                                                                                                                                                    #
  35. MS. MAHEUX:  Got your answer.
  36. MR. SHAIKH:  #                                                                                                                                             #
  37. MS. MAHEUX:  #                                                                                                                                                                                                                                                                                                                                                  #
  38. MR. SHAIKH:  #                                                                                                                                                                         #
  39. MR. WOODHEAD:  That's correct.
  40. THE CHAIRPERSON:  I think that completes our questions, then, if you're not able to share beyond that, and I respect the reasons why you feel unable to do so.
  41. So Madam Secretary, we will break for lunch, then, return in one hour.
  42. MS. MAHEUX:  Mr. President, we have questions with respect to the Director Nomination Agreement.
  43. THE CHAIRPERSON:  You're right.  My apologies.  We're not done.
  44. I'll turn the page.
  45. So as counsel just reminded me, we do have some questions on the Director Nomination Agreement.
  46. And again, I'll forego the preamble.  We do understand, as you do, what has been filed with us.
  47. So I'll be quite specific, if I may.  #                                                                                                                         #
  48. MS. DAMIANI:  #                                                                                   #
  49. #                                                                                                                                                                                                                                                      #          #
  50. #                                                                                                       #        #
  51. THE CHAIRPERSON:  And would the Rogers Statement of Corporate Governance Practices be considered a policy of the Board that would be applied in considering any actual or potential conflict?
  52. MS. DAMIANI:  Yes.
  53. THE CHAIRPERSON:  The Nomination Agreement  #                                                                                                     #
  54. #                                                                                                               #
  55. MS. DAMIANI:  #                                                                            #
  56. THE CHAIRPERSON:  #                                                               #
  57. MS. DAMIANI:  #            #
  58. THE CHAIRPERSON:  Thank you.  That answers the next question as to would you accept that, so it's done.
  59. Also in the Director's Code of Conduct and Ethics, conflict of interest is defined as, among other things, any material ownership or financial interest in any supplier or good or services to the company or in any major customer of the company.
  60. #                                                                                                                                                                                                                                                                                                                                  #         #
  61. MS. DAMIANI:  So maybe can — I'm going to tackle that in two ways.
  62. The first is, our affiliation agreements are ordinary course of business, so they are not matters that would be dealt with by the Board of Directors.  If there were a matter with Corus on the other side that was being dealt with by the Board of Directors, then the conflict of interest provisions of corporate law, our articles of code of conduct, et cetera, would be engaged and, as discussed, information would be withheld and the Shaw Family Trust nominees would not participate in the discussions or the vote.
  63. THE CHAIRPERSON:  And I think this answers — your preceding statement answers the question of would SFLT nominees be permitted to vote on matters involving the normal course of business with Corus or its affiliates even if the SFLT nominees are excluded from a meeting on such matters.  I think your —
  64. MS. DAMIANI:  I think we covered that.
  65. THE CHAIRPERSON:  — preceding answer is they would not.
  66. Are there any circumstances where — I guess I shouldn't put it that way.  I'll put it a different way.
  67. Does Rogers anticipate any favourable treatment to be offered to Corus?
  68. MS. DAMIANI:  We do not anticipate any preference to be offered to Corus.
  69. THE CHAIRPERSON:  The Nomination Agreement  #                                                                                                                                                                                                                                                        #
  70. Considering the concerns raised on the record about Corus' independence, do you think it would be appropriate to consider requiring SFLT nominees to recuse themselves from all decisions involving Corus or its affiliates?
  71. MS. DAMIANI:  So the Director Nomination Agreement #                                                                   # so — and I roll it all the way back to the British Columbia Business Corporations Act, which requires disclosure of conflicts of interest and the recusal that we've already spoken of.
  72. So the Director Nomination Agreement is just one piece of a puzzle.  It's not the only piece.  So I think that the items you're looking at are dealt with elsewhere.
  73. THE CHAIRPERSON:  So it'd be the same case in terms of any expectation or requirement that they be excluded — that SFLT nominees be excluded from meetings or portions of meetings involving Corus-related matters generally.
  74. MS. DAMIANI:  Yes.
  75. THE CHAIRPERSON:  I guess my final question will simply be, if, as you've heard these questions or as we move towards a close of the transaction, could you undertake to provide any revisions to the Directors Nomination Agreement #                                                                                              # or, in your view, they're adequate — essentially, would you undertake to provide any further refinements to the existing arrangements within 30 days after closing?
  76. MS. DAMIANI:  So the document you have now is in draft, and I believe we have undertaken to provide the final version when it's settled, so the final wording will be provided.
  77. THE CHAIRPERSON:  Thank you.
  78. Counsel, did you have any other questions on —
  79. MS. MAHEUX:  I don't have any question on the Director Nomination Agreement, but I do have a question on the arrangement agreement.
  80. THE CHAIRPERSON:  You may need to move your microphone closer or move yourself closer.  I'm guilty of it, too.
  81. MS. MAHEUX:  Is this better?  Okay.
  82. So the arrangement agreement defined the outside date as March 15, 2022 or such later date as may be agreed in writing by Rogers and Shaw.  So in the event that the Commission could not render its decision regarding the application before March 15, 2022, what would be the impact on the transaction?
  83. MS. DAMIANI:  I just — I want to take a moment on the outside date.
  84. So the outside date is March 15th.  It was set as 12 months from the time that the agreement was entered into, and the reason that that date was selected was because it provided ample time to move through all the regulatory processes.
  85. So Rogers and Shaw are fully committed to all the regulatory processes, to advancing them on a timely basis, and we believe that each and every one of them should be able to be completed within that timeline.
  86. So I think I would start there.  #                                                                                                                                             #
  87. MR. JOHNSON:  Maybe we can just add a little colour from the business perspective as well as to why that's so important.
  88. It's an incredibly competitive market in western Canada, particularly with Telus.  Each day that goes by, we basically face greater threats from Telus on our customer base as well as, you can imagine, with employees and the uncertainty.  That's why it's so critical for us to move forward and advance this application on all fronts as quickly as possible, and that's why we chose the date of March 15th.  We thought it was a safety — outside date, if you will, for completing the entire transaction and securing all the regulatory approvals.
  89. THE CHAIRPERSON:  I guess counsel's question, though — and I understand the response you provided.  The question still was, what are the implications if that date is not met.
  90. MR. JOHNSON:  #                                                                                                                                                                                                                     #
  91. THE CHAIRPERSON:  Understood.  Thank you, Mr. Johnson.
  92. MS. MAHEUX:  I only have one other question.
  93. So in order to give effect to the arrangement, you will have to file prior to the effective date.  That could have been asked in public, but we decided to ask you question related to the arrangement agreement in camera, so you will have to file the application to the Court to obtain the final order pursuant to section 183 of the Business Corporation Act as well as the Article of Arrangement prescribed by paragraph 193(10)(b) of the Business Corporation Act, which shall include the Plan of Arrangement.
  94. So would you agree to file these documents, the final order, the Article of Arrangement as well as the Plan of Arrangement with the Commission as a condition of approval of the transaction?
  95. MS. DAMIANI:  So the Court has rendered the final approval of the arrangement agreement — of the Plan of Arrangement, so that could be filed.
  96. MR. JOHNSON:  If you're referring to — just perhaps you could clarify for us what you're referring to in terms of the order.
  97. MS. MAHEUX:  We already have the interim order that has been —
  98. MR. JOHNSON:  Yes.
  99. MS. MAHEUX:  — rendered, but as part of the requirement, a final order has to be made also.
  100. MR. JOHNSON:  Yes.
  101. MS. MAHEUX:  So I was referring to the final one.
  102. MR. JOHNSON:  Okay, thank you.  So that's the May 25th order that you're seeking.
  103. Yes, we would be happy to file that.
  104. MS. MAHEUX:  Thank you.
  105. I don't have any other questions, Mr. President.
  106. THE CHAIRPERSON:  All right.  Then I will invite you to go for lunch once more.
  107. Thank you.  Thank you for your responses and we'll return, then, at 2 o'clock.
  108. THE HEARING SECRETARY:  This concludes the in camera session.

--- Whereupon the hearing concluded at 1:04 p.m. /
L'audience s'est terminée à 13 h 04

CERTIFICATION

I HEREBY CERTIFY that I have accurately reported and transcribed the foregoing to the best of my skill and ability/
J’ATTESTE, PAR LA PRÉSENTE, avoir rendu compte et transcrit le texte précédent avec exactitude et au meilleur de mes compétences et aptitudes.

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