By Divya Rajagopal
TORONTO (Reuters) - Canada's antitrust authority, Rogers (NYSE:ROG) Communications and Shaw Communications (NYSE:SJR) will begin two-day negotiations on Monday to discuss possible remedies to the contested C$20 billion ($15.5 billion) takeover of Shaw by Rogers, as the July deadline for the deal closure looms.
The regulator has blocked the deal saying it would significantly lessen competition in the country, where telecom rates are the steepest in the world according to Finish consultancy firm ReWheel.
At the heart of the dispute is Shaw's wireless business that has led the competition bureau to take a tough stand. Rogers has agreed to sell Freedom Mobile, one of Shaw's cellular businesses, to Montreal-based Quebecor.
While the bureau is studying the potential sale's impact on competition, it has previously said that alone would be insufficient to address the antitrust concerns.
Reuters reported in June the bureau was expected to seek the divesture of Shaw Mobile, a separate cellular business launched in 2020, as part of the remedies.
Even if the bureau signs off on the deal, the companies need approval from the Canada's ministry of Innovation, Science and Economic Development (ISED).
"We still have not received their formal application," Laurie Bouchard, an ISED spokesperson said, adding the minister will review the deal on its merits.
During the mediation process, the bureau and the companies will present their arguments to a tribunal judge. If they disagree, the judge could offer nonbinding solutions to settle the dispute.
If the parties reject the solutions, the dispute will enter the trial phase that could last until the end of this year, according to people familiar with the process.
Rogers has to pay Shaw a breakup fee of C$1.5 billion if the merger falls through.
Shaw shares have rallied 10% in the last two weeks, with the discount to Rogers' offer price narrowing to 6.3% by last week, on bets the deal will be eventually approved.
($1 = 1.2871 Canadian dollars)