Quebecor wants Ottawa to stop Loblaw from offering only Rogers, Bell phone products

The chief executive of Quebecor Inc. is urging Ottawa to intervene in what he calls an "anticompetitive" deal between Loblaw Cos. Ltd. and telecommunications services retailer Glentel that would end Freedom Mobile's presence at supermarket kiosks. Quebecor chief executive Pierre-Karl Peladeau speaks to the media after the company's annual meeting in Montreal, Thursday, May 9, 2024. THE CANADIAN PRESS/Ryan Remiorz

The chief executive of Quebecor Inc. is urging Ottawa to intervene in what he calls an "anticompetitive" deal between Loblaw Cos. Ltd. and telecommunications services retailer Glentel that would end Freedom Mobile's presence at its supermarket kiosks.

In a May 9 letter to Industry Minister François-Philippe Champagne and seen by The Canadian Press, Quebecor CEO Pierre Karl Péladeau alleged Loblaw "decided to prematurely terminate" a supply contract between the chain's in-store kiosks, known as The Mobile Shop, and the telecom's Freedom Mobile subsidiary.

He said the grocer is instead partnering with Glentel, which is jointly owned by Rogers Communications Inc. and Bell Canada and operates stores such as Wireless Wave and Tbooth Wireless.

While Péladeau said Loblaw has described the move as a routine decision about its store suppliers, he called it "a stratagem designed to exclude some carriers in favour of Glentel."

"We therefore appeal to you to intervene directly and firmly with Loblaw, Glentel, Bell and Rogers to end their anticompetitive manoeuvres," the letter stated.

"It is imperative that action be taken to preserve a fair competitive environment in the telecommunications and grocery businesses, in the best interests of Canadians."

The Mobile Shop is available at 180 Loblaw-owned grocery stores across Canada and currently lists plans for sale from all four major Canadian carriers or their subsidiaries on its website.

In a statement, The Mobile Shop said it represents less than five per cent of mobile phone and plan sales in Canada and noted it does not operate in Quebec.

"Based on our limited market presence in mobile, our decision of which carriers to sell does absolutely nothing to competition," said Daksa Mody, senior vice-president and chief operating officer for PC Financial and Services.

Mody added that Loblaw does not currently have any agreement in place that requires The Mobile Shop to buy or offer any Quebecor product in its stores.

"We went through a competitive process with all carriers, asking them for various scenarios. Quebecor chose not to fully participate," she said.

When asked, Quebecor did not say when its contract was supposed to end or how soon it was told the contract would be terminated. The company also did not clarify whether it had received a response from the minister.

In a statement, Champagne's office said the minister cannot direct an investigation on the matter.

"The letter would’ve been best addressed to the Competition Bureau, as the commissioner holds the powers to launch investigations," said spokeswoman Audrey Milette.

Quebecor did not say whether it has reached out to the competition watchdog.

In 2015, the bureau reached an agreement with Rogers and Bell that it said satisfied concerns about their acquisition of Glentel. The bureau had earlier warned the acquisition "would likely result in a substantial lessening of competition in the wireless sector."

But Rogers, Bell and Glentel agreed to place "administrative firewalls" that prevented the sharing of subscriber information, pricing and promotional offers.

The watchdog said those conditions were necessary to ensure the transaction did not provide either carrier with the ability to share confidential information that could result in consumers paying higher prices for wireless products and services.

Péladeau has been on the offensive this month when it comes to concerns about phone and internet competition.

"The incumbents will do anything to protect their monopoly for as long as possible in defiance of government policy," he said at Quebecor's annual general meeting, which was held the same day his letter was sent to Champagne.

"We are willing to do what it takes to be a market disrupter, but for us to continue playing our role as a strong fourth player, the constant obstruction from the Big Three to all forms of competition must stop"

Loblaw, meanwhile, has recently made other moves in the telecom sector.

Last month, the grocer launched low-cost cellphone plans under its No Name brand, offering prepaid mobile sim cards for purchase at all No Frills locations across the country.

The new No Name Mobile cellphone plans are powered by its PC Mobile carrier, which has been around since 2005 and runs on Bell's network.

This report by The Canadian Press was first published May 22, 2024.

Companies in this story: (TSX:QBR.B, TSX:L)

Sammy Hudes, The Canadian Press