Videotron sues Rogers for $ 850 million, citing breach of contract and “bad faith” negotiations on the shared network in Quebec – .

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Videotron sues Rogers for $ 850 million, citing breach of contract and “bad faith” negotiations on the shared network in Quebec – .


Videotron claims that Rogers is breaking an agreement signed between the two in 2013 to jointly build and maintain the infrastructure necessary for an LTE cellular network

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A new legal battle is brewing in Canadian telecommunications as Quebecor’s Videotron sues Rogers for $ 850 million for alleged breach of contract as well as for lack of “cooperation, loyalty and good faith” in negotiating upgrades to their network common in Quebec and Ottawa.

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The lawsuit comes as Rogers is currently embroiled in an epic drama caused by a family power struggle that has seen the attempt to oust CEO Joe Natale by Edward Rogers and two boards of directors claiming both legitimacy and control of the company.

In a lawsuit filed in the Superior Court of Quebec on Friday afternoon and obtained by the National Post, Videotron claims that Rogers is breaking an agreement signed between the two parties in 2013 to jointly build and maintain the infrastructure necessary for an LTE cellular network in the province of Quebec and the national capital region until 2033.

Videotron alleges that Rogers has essentially started building its own parallel network for its exclusive use over the past few years, while creating an “artificial dead end” and conducting “bad faith” negotiations in talks to update in such a way. significant shared infrastructure.

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“Rogers’ disloyal conduct puts Videotron ahead of (a) done : the common network does not evolve any more, deprived of investments because of the impasse ”, one reads in the lawsuit. This resulted in the loss of “hundreds of thousands” of customers for Videotron and a “very hard blow” to the reputation of the company, says the company.

“Videotron is doubly the victim of faulty conduct, given the lead that Rogers has given itself with its parallel network. “

Videotron is claiming $ 850.3 million from Rogers in compensatory damages in addition to asking a judge to order the Toronto telecommunications giant to respect the terms of their agreement.

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None of Videotron’s allegations have been tested in court.

In a statement Friday, Rogers blamed Videotron, accusing the company of not wanting to invest “jointly” in improving the network.

“Their lack of investment is not in the best interest of consumers and is inconsistent with our goal of providing the highest quality connectivity to our customers,” spokesperson Andrew Garas said via email.

“Regarding the Videotron lawsuit, we look forward to responding more fully to the courts. “

Two decades ago, Rogers attempted to buy Videotron in a multibillion-dollar transaction, but ultimately failed when Quebecor, backed by the Caisse de dépôt et placement du Québec, stepped in to buy the business.

Not only is Rogers currently engaged in a fight over the board of directors, but he’s also in the midst of a massive $ 26 billion acquisition of rival telecommunications company Shaw Communications.

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Before embarking on this offer, Rogers attempted to take control of Cogeco Inc., but the Montreal cable company rejected any offer.

Videotron’s lawsuits date back to 2013 when the company and Rogers signed an agreement to both build and operate an LTE infrastructure together across Quebec and in Ottawa as well as share the spectrum of cellphones (the airwaves through which signals travel) in order to divide the resulting expensive bill.

According to the lawsuit, the problems started in 2017 when Rogers told Videotron that it wanted to make significant (and therefore expensive) upgrades to the shared network to “meet or exceed the performance levels of its competitors.”

But the parties never managed to agree on cost sharing, with Videotron claiming that after “essentially accepting” Rogers’ proposal at the end of November 2017, everything suddenly collapsed in early 2018.

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This coincided with changes at the head of Rogers, allege the lawyers of Videotron, and in particular with the arrival of the new chief of technology Jorge Fernandes in February 2018.

In a statement, Rogers blamed Videotron, accusing the company of not wanting to invest “jointly” in improving the network. Photo de Peter J. Thompson/National Post/File

During a meeting a month later, Videotron alleges that Fernandes said he had never seen a partnership “as bad” as this one because it benefited Videotron at the expense of Rogers, as the one who negotiated the contract. The agreement for his company “should be fired”, and that he wanted Videotron to make a proposal that “would make Rogers the leader” of the agreement.

In early 2018, Rogers submitted a new proposal requiring Videotron to pay higher rent for the use of its partner’s spectrum on its shared network, says the Quebec company.

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“The impacts of this request for Videotron would be catastrophic, resulting in spending exceeding what had been agreed in the agreement of hundreds of millions of dollars”, argue the lawyers of Videotron.

At about the same time, the company reportedly told Videotron that it was starting to build its own parallel network for its exclusive use because it anticipated a “dead end” as negotiations continued through mechanisms of exchange. escalation previously agreed and contained in their agreement.

This, in turn, forced Videotron to start creating its own parallel network, a “massive investment” that exceeded what it would have cost if Rogers “had fulfilled its obligations,” alleges the company’s lawyer.

Negotiations between the leaders of Videotron and Rogers became increasingly tense and controversial throughout 2018, the former alleging that the “real objective” of the latter was to see the “premature dismantling” of their common network.

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“After unsuccessfully exploring other avenues to break the deadlock, Rogers quickly tabled its proposals to dismantle the common networks,” reads the lawsuit.

“Rogers acts as a fierce and unfair competitor in the face of market shares lost to Videotron (in Quebec) and in the Ottawa market, historically dominated by Rogers,” add Videotron’s lawyers. “Instead of continuing to play by agreed rules, Rogers distorts the agreement between the parties to gain a competitive advantage. “

This burgeoning legal battle comes at a crucial time for both companies.

Rogers has to deal with his conference room crash and his offer from Shaw.

Videotron begins promoting its future services in Western Canada, where the company has purchased $ 830 million worth of radio spectrum in Manitoba, Alberta and parts of British Columbia

Québécor and Videotron chief Pierre Karl Péladeau did not reveal a schedule for a potential launch during an interview with the Vancouver Sun earlier this week.

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