TORONTO (Reuters) - Canada’s Competition Bureau is taking Rogers Communications to court over claims its discount wireless brand offers superior quality to new telecom rivals entering the market.
Rogers, which has the largest share of Canada’s wireless market, launched a discount voice and text messaging brand called Chatr in July to fend off newcomers such as Wind Mobile, Mobilicity and Public Mobile, which offer no-frills plans for cost-conscious customers.
The new entrants bought spectrum in a 2008 government auction in which some airwaves were set aside for non-incumbents, in a bid to encourage more competition.
“New entrants attempting to gain a foothold in the market should not be discredited by misleading claims made by their competitors,” the bureau’s commissioner, Melanie Aitken, said in a statement.
Both Wind and Mobilicity hailed the decision, which followed their formal complaints about the Rogers advertisements , which claimed a lower rate of dropped calls on Chatr compared with the new entrants.
In response, Rogers and Score Technologies, an independent network tester, issued a statement backing the advertising.
“We’re surprised by the actions of the Competition Bureau,” said Rogers’ senior vice-president for regulatory affairs, Ken Engelhart. “We have extensive, independent third-party testing to validate our claims and we stand by our advertising. We will vigorously defend this action in court.”
The bureau said its two-month investigation involved an extensive review of technical data obtained from numerous sources and showed “no discernible difference in dropped call rates between Rogers/Chatr and new entrants”.
The Competition Bureau is seeking a court order for Rogers to scrap the ads and pay a C$10 million ($9.8 million) fine.
Rogers, which also has major holdings in cable-TV, broadcasting and publishing, posted a 24 percent dip in profit in its last quarter, in part because of heightened competition for its wireless unit.
Rogers and two other incumbent telecom firms -- BCE Inc and Telus Corp -- control around 95 percent of Canada’s wireless market.
Reporting by Alastair Sharp; editing by Rob Wilson