Videotron Takes Legal Action Against Rogers Over freedom Mobile Sale
Videotron has initiated a lawsuit against Rogers, seeking $91 million for allegedly breaching their contract during the sale of Freedom Mobile. This legal action was filed in the Ontario superior Court and coincides with the two-year anniversary of Rogers completing its acquisition of shaw.
Background on the Lawsuit
According to reports,Videotron's notice of action is brief and does not provide specific details about the alleged breach. The company is asking the court to enforce terms from an August 2022 share purchase agreement that outlines Videotron's acquisition of Freedom Mobile shares. More data will likely emerge when Videotron submits a formal statement of claim.
In its lawsuit, Videotron claims that Rogers has unjustly benefited from this situation and demands $91 million in damages due to breach of contract, failure to fulfill duties, and negligent misrepresentation.
Details on freedom Mobile Acquisition
Videotron purchased Freedom Mobile for $2.85 billion as part of Rogers' larger $26 billion deal to acquire Shaw in 2023. This transaction also resolved a previous dispute between both companies regarding an earlier network-sharing agreement that led to a lawsuit worth $850 million.
As for comments on this matter, Videotron did not respond before publication time while Rogers chose not to comment either.
It’s important to note that none of these allegations have been proven in court yet.
Conditions Surrounding the Sale
To finalize its purchase, Videotron agreed to several conditions aimed at ensuring fair competition. These included commitments like offering plans at least 20% cheaper than those provided by major competitors such as Bell and Telus. Additionally, they promised to expand their 5G network within two years where Freedom operates.
Rogers’ Commitments During Merger Approval
Rogers also made various commitments when securing approval for its merger with Shaw. These included creating 3,000 new jobs in Western Canada and establishing a headquarters in Calgary.Furthermore, they pledged significant investments: $1 billion towards broadband internet access and 5G services where they are currently lacking; another $2.5 billion into expanding their own 5G network; plus an additional $3 billion for other network projects across Western Canada.
Both companies face potential fines if they fail to meet these obligations—upwards of $200 million for videotron and up to $1 billion for Rogers.
Reactions Following Merger completion
On the first anniversary after merging with Shaw,Rogers celebrated what it called increased competition and lower wireless prices resulting from this deal. though, during this same period, customers who previously used Shaw services experienced price hikes along with layoffs affecting many employees due to restructuring efforts post-acquisition.
In just one year alone as acquiring Shaw’s assets:
- Nearly 400 customer support workers were laid off.
- Customers faced multiple rate increases including higher connection fees.
- Roaming rates were raised ahead of March Break.
- A new fee was introduced specifically targeting users still on their older 3G networks.
Additionally, despite these challenges faced by customers post-merger:
Rogers is preparing significant expenditures such as spending around $11 billion over twelve years on NHL broadcasting rights while also finalizing deals like selling part ownership stakes in its network valued at $7 billion through Blackstone investment firm.
