Source text

Telus Communications Inc. v. Vidéotron Ltée
Court (s) Database
Federal Court Decisions
Date
2022-05-17
Neutral citation
2022 FC 726
File numbers
T-1335-21
Decision Content
Date: 20220517
Docket: T-1335-21
Citation: 2022 FC 726
Toronto, Ontario, May 17, 2022
PRESENT: Mr. Justice Diner
BETWEEN:
TELUS COMMUNICATIONS INC.
Applicant
and
VIDÉOTRON LTÉE, BELL MOBILITY INC., BRAGG COMMUNICATIONS INC., CITYWEST CABLE AND TELEPHONE CORP, COGECO CONNEXION INC.,
COMCENTRIC NETWORKING INC., ECOTEL INC., IRISTEL INC., LEMALU HOLDINGS LTD., 1085459 ONTARIO LTD. O/A KINGSTON ONLINE SERVICES,
MULTIBOARD COMMUNICATIONS INC., 508896 ALBERTA LTD. O/A NETAGO, NEXICOM INC., ROGERS COMMUNICATIONS CANADA INC., SASKATCHEWAN TELECOMMUNICATIONS, SOGETEL INC., STAR SOLUTIONS INTERNATIONAL
INC., TBAYTEL, TERRESTAR SOLUTIONS INC., THOMAS COMMUNICATIONS LTD., VALLEY FIBER LTD., FIBRENOIRE INC. AND XPLORNET COMMUNICATIONS INC.
Respondents
and
ATTORNEY GENERAL OF CANADA
Intervener
JUDGMENT AND REASONS
[1] This is a judicial review of the determination, made by a delegate of the Minister of Industry [the Minister], that Vidéotron ltée [Vidéotron] was eligible to bid on set-aside spectrum in the 2021 3500 MHz spectrum auction [the Auction]. Consistent with the prescribed process, the set-aside eligibility determination [the Decision] was made on April 21, 2021 and shared with Vidéotron, but did not become public until the results of the Auction were released by the Department of Innovation, Science and Economic Development Canada [ISED] on July 29, 2021. The spectrum in question is critical for the development of fifth generation [5G] technology standards of cellular networks for mobile phones and other technologies across Canada.
[2] The Decision, which permitted Vidéotron to bid on and obtain set-aside spectrum in British Columbia, Alberta and Manitoba [together Western Canada], is now challenged by TELUS Communications Inc. [TELUS] on procedural and substantive grounds. For the reasons that follow, I find the set-aside eligibility assessment process and the Minister’s decision to have been fair and reasonable, and will dismiss the Application.
I. Background
A. Statutory Framework
[3] Spectrum is a limited public resource that consists of electromagnetic waves of various frequencies, which facilitate the use of communication technologies and services including mobile phones, satellites, two-way radio and broadcasting. The Minister, to whom authority is conferred by the Department of Industry Act, SC 1995, c 1, the Radiocommunication Act, RSC 1985, c R-2 and the Radiocommunication Regulations, SOR/96-484, is responsible for spectrum management in Canada. Management of spectrum plays a critical role for Canada, fostering the growth of telecommunications and ensuring that radiocommunications services, from cellphones to air traffic control, are properly managed and free from interference.
[4] Section 7 of the Telecommunications Act, SC 1993, c 38 sets out the objectives of Canadian telecommunications policy, which include: rendering reliable, affordable, high quality telecommunications services accessible to Canadians in all regions of Canada; enhancing efficiency and competitiveness; stimulating research and encouraging innovation; and, fostering increased reliance on market forces (for s 7, and other statutory provisions referenced in these Reasons, see Annex A). The Canadian Radio-Television and Telecommunications Commission [CRTC], as prescribed in Part III of the Telecommunications Act, regulates telecommunications services including the approval of rates and conditions of service.
[5] Section 5(1) of the Radiocommunication Act confers broad powers on the Minister to, inter alia, issue licenses, fix and amend their terms and conditions, and to plan the allocation and use of spectrum. These licenses are critical to the operation of any mobile phone network and are issued from time to time to telecommunication service providers by way of auctions. The bidding process for the attribution of licenses is competitive and s 5(1.4) of the Radiocommunication Act allows the Minister to prescribe rules, standards and conditions applicable to the system of competitive bidding.
B. Spectrum Licenses
[6] Spectrum licenses allow their holders to use specified frequencies within defined geographic areas. Service areas are divided and further subdivided based on “tiers.” Tier 1 is a single national service area covering all of Canada. Tier 2 consists of 14 large service areas covering the entire country, and in some cases corresponds to an entire province. For instance, British Columbia, Alberta, and Manitoba are each distinct Tier 2 service areas. Tiers 3 and 4, by contrast, consist of smaller regional, and more localized service areas, respectively. Tier 2 and Tier 4 service areas were relevant for the determination of eligibility to bid on set-aside spectrum in the Auction.
[7] The 2021 3500 MHz Auction was the latest in a series of four spectrum auctions that have taken place since 2008. The three prior auctions took place in the decade from 2008 through 2018, namely the ASW-1 (2008), ASW-3 (2015) and 600 MGz (2018) auctions. Consistent with the objectives of the Telecommunications Act, these spectrum auctions have included “pro-competitive measures”, intended to enhance competition among mobile phone service providers. The principles underlying the measures are found in Framework for Spectrum Auctions in Canada, published in 2011 by ISED (then Industry Canada). Spectrum caps, for example, impose limits on the width of spectrum a particular licensee can hold.
[8] Spectrum set-asides, another pro-competitive measure, reserve a certain portion of spectrum for carriers who do not meet the definition of “national mobile service providers” [NMSPs]. An NMSP, by definition, holds more than 10% of the national market share. Currently, there are three NMSPs - TELUS, Bell and Rogers.
[9] The specific criteria for eligibility to bid on set-aside spectrum has varied in the 2008, 2015, 2018 and 2021 auctions. In 2008, eligibility for set-aside spectrum was reserved to new entrants, defined as those who held less than 10% of national wireless market share based on revenue. In 2015, set-aside eligibility rules were much more specific. They varied depending on the service areas in question, and potential bidders needed to already be providing commercial mobile wireless services and demonstrate specific network coverage in each relevant service area. In 2018, eligibility requirements for set-aside spectrum related to the provision of services, but were less stringent and less detailed than in 2015. For example, while set-aside eligible bidders had to be providing commercial telecommunications service in the relevant Tier 2 service areas, there was no minimum customer threshold or level of coverage requirement.
C. 2021’s 3500 MHz Spectrum Auction
[10] The 3500 MHz band of spectrum, as mentioned above, is crucial for the deployment of 5G mobile technology standards for cellular networks. 5G provides opportunities for innovative, interconnected and data intensive applications, operating at higher speeds and providing increased bandwidth than prior standards. 5G requires large amounts of spectrum in a variety of frequency bands.
[11] The process leading to the 2021 Auction and the impugned set-aside eligibility assessment process began in 2019. In June 2019, ISED announced a public Consultation on a Policy and Licensing Framework for Spectrum in the 3500 MHz Band.
[12] Extensive consultations followed, involving broad participation by stakeholders across the country, including both TELUS and Vidéotron, which led ISED to make a series of policy decisions that would govern the Auction. In March 2020, ISED released the Policy and Licensing Framework for Spectrum in the 3500 MHz Band [the Framework]. This voluminous document sets out the policy underpinning of and ground rules for the Auction. The bidder application and qualification stage, which includes set-aside eligibility determinations (the subject of this judicial review); the bidding stage to obtain spectrum licenses; and the post-auction license renewal process, are all comprised within the Framework.
[13] To promote competition for the Auction, the Framework implemented a set-aside of 50 MHz of spectrum, consisting of approximately 25% of the spectrum up for auction, to be reserved for eligible service providers (which excluded NMSPs). The Framework referred to prior use of set-asides having contributed to growth and competiveness of regional providers. The Framework also referred to findings of the Competition Bureau citing the market power possessed by NMSPs, the high barrier to entry in certain areas, and the lower prices enjoyed by customers in areas where regional providers had established market share. Paragraphs 36-44 of the Framework, in addition to other relevant excerpts referenced below, have been reproduced in Annex B to these Reasons.
[14] Eligibility to bid on the set-aside spectrum was established in “Decision D2” of the Framework. Decision D2 limited set-aside eligibility to service providers meeting the following description:
Eligibility to bid on set-aside spectrum will be limited to those registered with the CRTC as facilities-based providers that are not national mobile service providers, and that are actively providing commercial telecommunications services to the general public in the relevant Tier 2 service area of interest, effective as of the date of application to participate in the 3500 MHz auction. Services that are regulated under the Broadcasting Act will not be considered as “commercial telecommunications services” for the purposes of set-aside eligibility, however all services that are regulated under the Telecommunications Act may qualify.
[Decision D2, para 64 of the Framework; emphasis added.]
[15] It is important to note that the licenses were being issued for the more localized Tier 4 service areas, but the eligibility criteria above refer to a bidder providing services anywhere in the larger Tier 2 service area. A bidder interested in obtaining spectrum in the Tier 4 service area of Steinbach, Manitoba, for example, need only be actively providing commercial telecommunications services to the general public somewhere in the relevant Tier 2 service area of Manitoba, such as Winnipeg, to be eligible to bid on set-aside spectrum in Steinbach
[16] In response to concerns raised as to how “general public” would be defined, the Framework clarified that it could include “businesses, enterprises and institutions in addition to traditional ‘residential customers’, and that ‘providers who are actively offering commercial telecommunications services to any of these consumers will be considered set-aside-eligible as long as they meet the additional eligibility criteria’” (at para 60, Framework).
[17] In addition to set-aside spectrum, the Framework also imposed non-transferability measures. These were intended to ensure that set-aside licenses would not be transferrable to set-aside ineligible entities for at least five years of the license term, in order to strike a balance between deterring speculation – for example, by bidders intending to simply resell instead of actually deploying licenses – and awarding spectrum to entities who were positioned to use it.
[18] Potential bidders applying for set-aside eligibility would be required to demonstrate their eligibility by providing relevant documentation to ISED describing 1) the services offered in the relevant area; 2) the retail/distribution network; and, 3) how subscribers access services and the number of subscribers in the area (para 64, Framework).
[19] Section 12.5 of the Framework outlined that ISED would review the application forms and associated documents after the closing date for submissions of applications. During this initial review, ISED would identify any errors in the forms and determine whether any additional information related to affiliates or associated entities was required. For the purposes of set-aside eligibility applications, ISED would assess eligibility to obtain licenses in Tier 4 service areas based on the relevant Tier 2 service areas of interest. ISED could also make written requests for further information and could verify the information that was provided. Applicants who failed to comply with the written requests would be rejected. Rejected applications, including cases where a response to a request was received but found to nevertheless be deficient, would be returned to the Applicant (paras 435-440, Framework).
[20] In December 2020, ISED published responses to questions, and updates about the Auction in Responses to Clarification Questions on the Policy and Licensing Framework for Spectrum in the 3500 MHz Band the [Clarification Document]. On March 15, 2021, the Clarification Document was updated to provide the following question and response regarding set-aside eligibility:
QUESTION 3.3: How does being an affiliate affect an applicant’s set-aside-eligibility?
RESPONSE 3.3: An applicant may be eligible to qualify as a set-aside-eligible bidder based on the eligibility of its affiliated entities or, where an applicant is a partnership, on the eligibility of the partners who control the applicant.
As long as the applicant itself is not affiliated with or controlled by a national mobile service provider, and where one or more affiliates or controlling partners of the applicant is registered with the Canadian Radio-television and Telecommunications Commission (CRTC) as a facilities-based provider, that applicant may be qualified as set-aside-eligible to bid in all licence areas where an affiliate or controlling partner is actively providing commercial telecommunications services to the general public in the relevant Tier 2 service area, as set out in section 6.1 of the Framework.
All applicants must disclose their affiliates and, where applicable, any controlling partners of the applicant in their application form. Applicants who wish to be considered as set-aside-eligible bidders will have to indicate and explain for each licence area, if they are directly eligible or through which affiliate or controlling partner, they are eligible.
[Emphasis added.]
[21] ISED’s assessment of applications was a closed process, as had been the case in previous spectrum auctions. This was to ensure the integrity of the 3500 MHz Auction, and to protect confidential information provided in the applications. The Clarification Document indicated that ISED would not release, to the public, post-auction documentation regarding where bidders applied, or the basis upon which successful applications were granted. Response 2.11 of the Clarification Document provided:
…as in past auction processes, a list of all qualified bidders, along with information related to their beneficial ownership, affiliates, and associated entities, will be made public via ISED’s website in accordance with the timelines stated … The number of eligibility points, financial deposit amounts, and eligibility status, including set-aside eligibility, will not be published. ISED makes its rulings on applicant set-aside eligibility based upon the information provided by the applicant as assessed against the set-aside eligibility criteria in accordance with the Framework.
[Emphasis added.]
[22] However, in accordance with Response 2.11 above, ISED did release a list of all qualified bidders to the public, along with information about their beneficial ownership, affiliates and associated entities.
D. The 3500 MHz Auction
[23] The Auction ultimately generated revenue of $8.91 billion for the Government of Canada.
[24] Vidéotron applied, and was ultimately determined eligible, to be a set-aside bidder in the Tier 2 service areas in question for this judicial review, Manitoba, Alberta and British Columbia, on the basis of services provided by its affiliate, Fibrenoire Inc. [Fibrenoire]. On July 29, 2021, Vidéotron was the successful bidder for 128 set-aside licenses across 45 license areas in Western Canada.
[25] On August 3, 2021, TELUS wrote to ISED questioning the set-aside eligibility findings regarding Vidéotron and requesting a complete record of the material they filed.
[26] ISED responded with an August 11, 2021 letter explaining the finding that, based on a review of Vidéotron’s application materials and verification of publicly available services, Vidéotron was eligible as a set-aside bidder in accordance with the Framework and Clarification Document. ISED also stated that in accordance with the prescribed process, it would not release Vidéotron’s documentation.
[27] On August 26, 2011, TELUS commenced this application for judicial review.
E. Procedural Background at the Federal Court
[28] A motion for an interlocutory injunction to stay the issuance of the licenses to Vidéotron in Western Canada, brought in September 2021 by TELUS, was dismissed by Justice Grammond of this Court by Order and Reasons dated October 22, 2021 (Telus Communications Inc. v. Vidéotron Ltée, 2021 FC 1127 [Telus v. Vidéotron]).
[29] The Minister proceeded to issue the licenses assigned through the 3500 MHz Auction on December 17, 2021.
[30] The Attorney General of Canada [AGC] was granted leave to intervene in these proceedings, and initially did not produce a complete tribunal record due to confidentiality concerns expressed by Vidéotron. TELUS and Vidéotron each brought competing motions, for disclosure and confidentiality, respectively. Vidéotron’s motion was dismissed by an Order of Prothonotary Tabib, dated December 6, 2021, which circumscribed the disclosure process for confidential information. Vidéotron appealed this order.
[31] Ultimately, the parties resolved their disagreement on consent and, on February 3, 2022, Justice Pentney issued a protective confidentiality Order pursuant to Rules 151 and 152 of the Federal Courts Rules, SOR/98-106. TELUS, Vidéotron and the AGC each thereafter provided a redacted public version, in addition to a confidential private version of their respective records. TELUS’ affiant, Mr. Mulvihill, was allowed to access and provide evidence based on the full record. Vidéotron and the AGC also presented affiants, Messrs. Dennis Béland and Daniel Anderson respectively, both of whom, like Mr. Mulvihill, annexed extensive evidence to their Affidavits.
[32] The entire judicial review hearing proceeded in public before me, without any need to resort to in camera discussions. One of the other Respondents, Iristel Inc., provided their submissions in a public record, and without having had access to the confidential records of TELUS, Vidéotron and the AGC. Representatives of some of the other Respondents, along with other members of the public, also listened to the virtual hearing.
[33] Mindful of these individuals, the open court principle, and in the interests of the administration of justice remaining public, no confidential information from any of TELUS, Vidéotron or the AGC’s confidential records is contained in these Reasons. As such, there are no redactions, nor any need for a confidential set of reasons to be released separately.
II. Decision under Review
A. Vidéotron’s Set-Aside Eligibility Application
[34] Vidéotron’s set-aside eligibility application, which formed part of the broader application to participate in the Auction that was required of all prospective bidders, consisted of completing a series of standardized forms established by ISED, attaching supporting documentation, and submitting the completed application confidentially on April 5, 2021.
[35] Vidéotron’s application confirmed that: Fibrenoire was an affiliate registered with the CRTC as a facilities-based provider, indicated all of the Tier 2 areas where Vidéotron wished to apply for set-aside eligibility, and identified all of the Tier 4 areas where it was already providing commercial telecommunications services to the general public.
[36] Vidéotron also attached documentation marked as confidential to its application, which included detailed descriptions addressing how Vidéotron met the set-aside eligibility criteria, including: descriptions of the services offered by Vidéotron and Fibrenoire in their respective service areas as well as their sales and distribution networks, the numbers of clients served, and how those clients accessed their services.
B. The Assessment and Verification Process
[37] As indicated above, the Framework provided that ISED would review the completed forms and associated documents, assess eligibility and, if necessary, request further information and verify the information provided.
[38] The AGC’s affiant, Daniel Anderson, a Manager in the Spectrum Licensing and Policy Branch at ISED, was responsible for the set-aside eligibility assessments of all applicants. He had also been responsible for leading the policy development for the 3500 MHz Auction. A form called “3500 MHz Auction Set-Aside Eligibility Assessment (Form 4)” the [Assessment Form] was used to record Mr. Anderson’s evaluations of the 19 applications for eligibility as set-aside bidders, between the application deadline of April 6, 2021 and April 22, 2021, at which point a list of qualified bidders would be published.
[39] According to his Affidavit, Mr. Anderson began his assessment of Vidéotron’s set-aside eligibility on April 7, 2021, the day after the application deadline, entering information from the application directly onto the Assessment Form. He verified that both Fibrenoire and Vidéotron were indeed registered with the CRTC as facilities-based providers, which is reflected on the Assessment Form.
[40] Vidéotron had indicated in its application that it qualified for set-aside in British Columbia, Alberta, and Manitoba through its affiliate, Fibrenoire. Vidéotron claimed that Fibrenoire had customers in each of these Western provinces as well as Northern Ontario, but did not indicate who or where they were. Mr. Anderson testified that he wanted to verify the information provided by Fibrenoire about their services, including their distribution network in Western Canada, but was unable to do so using their website.
[41] As a result, Mr. Anderson states in his Affidavit that he asked Nancy Macartney, one of his ISED colleagues who was participating in the assessment and verification process, to contact Vidéotron to request further details. On April 9, 2021, Ms. Macartney sent a letter to Vidéotron through secure electronic post, citing the criteria set out in the Framework for establishing set-aside eligibility and requesting that detailed information be provided for each of four service areas, namely Northern Ontario, and the Western Canadian provinces at issue in this case - Manitoba, Alberta and British Columbia.
[42] On April 12, 2021, Mr. Béland, a Vice-President of Regulatory Affairs at Quebecor Inc. and Vidéotron’s affiant in the present application, replied on behalf of Vidéotron. Mr. Béland’s reply provided a more detailed description of the various categories of services provided by Fibrenoire in Western Canada, a list of customers, and detailed explanations of how business customers accessed the services, how equipment was distributed and what particular services were provided to each customer. One excerpt of the letter, for instance, reads as follows:
[translation]
Fibrenoire is actively providing business telecommunications services to the general public in service areas 2-008, 2-009, 2-010, 2-012 and 2-013, as it currently provides symmetrical speed connectivity services over dedicated fibre links to retail business customers with commercial operations in these areas. In addition to these fibre connectivity services, a growing portion of Fibrenoire’s customers also subscribe to services such as wireless backup connectivity and over-the-top networking applications.
. . .
For each of the four categories of service provided, Fibrenoire ensures that the customer’s sites are connected to its backbone network through fibre access facilities (except for the minority of SD-WAN cases where coaxial cable or wireless facilities are used). Except in some areas of Toronto where Fibrenoire operates its own backbone Internet network, these fibre access facilities are sourced from business partners operating networks in the areas in question. However, even when it sources others’ fibre access facilities, Fibrenoire provides the equipment on the customer’s premises. Furthermore, in all cases, Fibrenoire is fully responsible for monitoring and managing the connectivity provided to the customer.
Subject to the availability of adequate facilities from its business partners, Fibrenoire is ready to provide telecommunication services anywhere in the service areas . . .
. . .
When a new retail business customer contacts Fibrenoire for the first time, they are immediately assigned to a dedicated sales representative. This representative works with the customer to assess their needs, determine the most appropriate service category and negotiate a service contract. Typically, multi-year service commitments are required to ensure the most advantageous pricing. The assigned sales representative will then personally see to the delivery and installation of the equipment at the customer’s premises (see more details below) and will be available to the customer to resolve any activation issues that may arise. The sales representative also works with the customer on an ongoing basis to ensure that the service ordered continues to best meet the customer’s needs.
Generally speaking, Fibrenoire’s dedicated sales representatives are physically located in Quebec, as Fibrenoire’s customers in the above-mentioned areas are most often branches of large Quebec companies that already have a well-established business relationship with the company. Nevertheless, Fibrenoire has a growing list of retail business customers headquartered outside of Quebec, who are well served by the Quebec-based sales experts.
[43] To verify that new business customers could obtain services from Fibrenoire in Western Canada, Mr. Anderson deposes that he placed two anonymous calls to Fibrenoire, using a blocked number. First, he posed as a potential business client with offices in Vancouver and Calgary and asked if Fibrenoire could provide services. The next day, he placed a second call posing as a potential business client with offices in Winnipeg and Thunder Bay. In both cases, Fibrenoire responded that it could offer internet services but that it would not be through Fibrenoire’s own infrastructure, but rather arranged through third-party infrastructure.
[44] At the end of the Assessment Form for Vidéotron, Mr. Anderson recommended that Vidéotron be granted set-aside eligibility in all the service areas where it applied, including Western Canada. For each of the Tier 2 service areas in Western Canada, Mr. Anderson indicated, “Provides OTT [over the top] services to businesses through affiliate Fibrenoire” and at the end of the form he wrote “Provides internet services to business through Fibrenoire as wholesaler.”
[45] Mr. Anderson deposes that on April 19, 2021, after completing his assessment, he met with ISED’s Senior Director, Mathew Kellison [the Minister’s delegate]. Mr. Anderson states that he explained his assessment of the application, the response received to ISED’s written request, the verifications he had completed by telephone, and the rationale for his recommendation. He also states that Mr. Kellison indicated that he agreed that Vidéotron met the requirements for set-aside eligibility in each of the areas in which it had applied.
[46] The Minister’s delegate made the Decision on behalf of the Minister on April 21, 2021, which is indicated on an internal document called “3500 MHz Auction Application Assessment Form” [the Compiled Assessment Form]. At the time the decision was made, the Minister’s delegate had the completed Assessment Form, all materials provided to ISED by Vidéotron (including the April 12 letter cited at para 42of these Reasons) and the Compiled Assessment Form before him on a USB key (as noted in a Response to Undertaking email from the AGC, at p. 1106 of the Applicant’s Record).
[47] The next day, April 22, 2021, ISED published its list of qualified bidders. The findings on set-aside eligibility were shared with each applicant but were not made public prior to the auction, in accordance with the Framework and the Clarification Document.
III. Issues and Analysis
[48] TELUS submits two arguments in support of their application for judicial review. First, TELUS argues that the Minister failed to respect the duty of procedural fairness that was owed. According to TELUS, ISED failed to adhere to the procedure it established for itself, and failed also to maintain adequate records of the steps taken in the assessment of Vidéotron’s set-aside eligibility.
[49] Second, TELUS submits that the decision of the Minister was unreasonable. It argues that ISED’s reasoning process was incoherent and lacked transparency, and that the determination could not be justified in light of the factual record and the Framework’s set-aside eligibility criteria.
[50] TELUS argues that Vidéotron should be disqualified as a set-aside bidder in Western Canada, and that the spectrum licenses it won there should be revoked, and that a new auction should be held, for which Vidéotron should not be eligible to participate.
[51] The Respondents and the Intervener assert, on the other hand, that there were no flaws in either the reasonableness or fairness of the set-aside eligibility determination, and that this application should be dismissed.
A. Standard of Review
[52] While the Parties and the Intervener disagree on the outcome of this application, they agree on the applicable standards of review. First, with respect to the issue of procedural fairness, the Court must ask whether, having regard to all the circumstances, the procedure was fair and just (Canadian Pacific Railway Company v. Canada (Attorney General), 2018 FCA 69 at paras 54-56 [CPR]; Ahousaht First Nation v. Canada (Indian Affairs and Northern Development), 2021 FCA 135 at para 31).
[53] Such an assessment often involves a consideration of the non-exhaustive list of factors outlined by the Supreme Court in Baker v Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 SCR 817 [Baker], and entails assessing “with a sharp focus on the nature of the substantive rights involved and the consequences for an individual, whether a fair and just process was followed” (CPR, at para 54).
[54] The Parties also agree that the second issue entails considering whether the Minister’s decision was reasonable. In Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov], the Supreme Court set out a revised framework to determine the standard of review, whereby reasonableness is the presumptive standard. The Parties agree that there is no reason to depart from the reasonableness standard in this case.
B. Preliminary Issues
[55] I will begin my analysis with two preliminary matters that were raised by Vidéotron and TELUS respectively, namely (i) TELUS’s lack of standing to bring the application, and (ii) the improper contents of the Anderson and Béland affidavits.
[56] First, Vidéotron asserts that TELUS has no standing to bring this judicial review because, as an NMSP, TELUS was not entitled to participate in the Auction for set-aside spectrum, and thus has no direct interest in the matter. TELUS contests this argument, asserting that they were directly affected by the breach to their right to a procedurally fair process. The AGC takes no position on the issue, but as TELUS points out, the AGC does acknowledge that the Minister had at least a minimal duty of procedural fairness toward TELUS.
[57] The second preliminary issue is TELUS’ argument that the Affidavit evidence of Messrs. Anderson and Béland was inappropriate and seeks to impermissibly add to the tribunal record (paras 59-63, 65 and 68 of the Anderson Affidavit and para 47 of the Béland Affidavit).
(i) TELUS has direct standing to bring the application
[58] Section 18.1(1) of the Federal Courts Act, RSC 1985, c F-7, states:
18.1 (1) An application for judicial review may be made by the Attorney General of Canada or by anyone directly affected by the matter in respect of which relief is sought.
18.1 (1) Une demande de contrôle judiciaire peut être présentée par le procureur général du Canada ou par quiconque est directement touché par l’objet de la demande.
Vidéotron argues that TELUS, as an NMSP, had no right to bid for set-aside spectrum, the eligibility assessment determination which it challenges in this judicial review.
[59] As a result, Vidéotron contends that TELUS is not directly affected by the matter in which it seeks relief. Vidéotron relies on Soprema Inc. v. Canada (Attorney General), 2021 FC 732 [Soprema], which in turn relies on CanWest MediaWorks Inc. v Canada (Health), 2007 FC 752 [CanWest] (aff’d 2008 FCA 207). Soprema and CanWest stand for the principle that for an applicant to be considered ‘directly affected’, the matter at issue must be one which adversely affects their legal rights, imposes legal obligations, or prejudicially affects them directly. Vidéotron relies on Soprema, and CanWest for the proposition that commercial or economic harm is not, in itself, sufficient to ground standing.
[60] Vidéotron also relies on other cases refusing standing due to a lack of adverse impact to legal rights, including Novo Nordisk Canada Inc. v Canada (Health), 2019 FC 822 at paras 8-9, which held that commercial or economic harm is not sufficient to grant direct standing where the party’s legal rights are not affected and the party is not prejudiced. Similarly, Vidéotron relies on Ultima Foods Inc. v Canada (Attorney General), 2012 FC 799 [Ultima Foods] at paras 102-103, where a licence granted to a third party for the importation of yogurt was held not to impose rights or obligations on another party.
[61] TELUS counters that having been an active participant both in the consultation and the bidding processes of the Auction, its legitimate expectations of procedural fairness were undermined by how the set-aside eligibility determination process unfolded. TELUS argues that Irving Shipbuilding Inc. v. Canada (Attorney General), 2009 FCA 116 [Irving] provides a complete answer to the standing issues.
[62] TELUS acknowledges that it was not eligible to bid on set-aside spectrum, but nevertheless points out that it competed directly against Vidéotron during the phase of the auction which concerned the assignment of spectrum frequencies. TELUS notes that all the participants in the Auction had to apply to qualify, and set-aside eligibility determinations were simply one component of the broader application process in which all prospective bidders participated. As a participant in the Auction, TELUS contends that it has standing on the basis of its expectation of a fair process.
[63] I agree that this is not a particularly compelling example of being directly prejudiced. It is especially telling that TELUS is not joined in pursuing this application by any of the set-aside eligible bidders who participated in the Auction, who would have had a relatively greater interest in seeing set-aside eligibility determinations being made fairly, and who would have been even more directly affected by bidding directly against Vidéotron for set-aside spectrum. Their silence in this application has not gone unnoticed.
[64] Nevertheless, I find that TELUS has a sufficient basis to assert that its legal rights are affected, and to ground its standing to bring this Application, on account of its arguments regarding the procedural unfairness of the ISED process. Even if the content of the duty owed to it is found to be minimal, the fact that TELUS participated actively in the consultation leading to the Auction, and indeed, applied and participated in the Auction itself, there is no denying that they had a direct interest in the entirety of the Auction process being conducted fairly. In Irving, Justice Evans wrote at para 28:
In my view, the question of the appellants’ standing should be answered, not in the abstract, but in the context of the ground of review on which they rely, namely, breach of the duty of procedural fairness. Thus, if the appellants have a right to procedural fairness, they must also have the right to bring the matter to the Court in order to attempt to establish that the process by which the submarine contract was awarded … violated their procedural rights. If [the government department] owed the appellants a duty of fairness and awarded the contract to [the contract bid winner] in breach of that duty, they would be “directly affected” by the impugned decision. If they do not have a right to procedural fairness, that should normally conclude the matter.
[65] I note that in Ultima Foods, which Vidéotron relies on, the circumstances were distinguishable. There, the applicants, firms in the Canadian yogurt market, opposed import permits that allowed another Canadian yogurt processor to import yogurt into Canada. The Court did not accept that the applicants would be directly affected or experience prejudice as a result of the decision to grant the import permits, despite their claims that the decision threatened their businesses, and would reduce revenues and threaten the supply chain of Greek yogurt in Canada. The Court held the applicants did not have standing because they were only going to be impacted economically by the permits being awarded to the prospective yogurt importer.
[66] Vidéotron further argues that Justice Grammond already dismissed TELUS’ economic arguments on the market distortion impact of the Auction in Telus v. Vidéotron,at paras 69-77. I agree with Justice Grammond’s finding as it pertains to his assessment of the irreparable harm component of an interlocutory injunction. However, I cannot agree that TELUS’ failure to establish irreparable harm in their injunction application amounts to a finding that the result of the Auction did not have any direct financial impact. The impossibility of predicting the outcome or quantifying the financial impact of an Auction scenario where Vidéotron was determined not to be eligible to bid on set-aside spectrum in Western Canada, does not inexorably lead to a finding that TELUS suffered no direct financial impact.
[67] Furthermore, unlike Ultima Foods, TELUS was not simply a competitor on the sidelines of an administrative process that did not concern them. TELUS, though admittedly not eligible to bid on set aside spectrum, was nonetheless a direct participant in the broader Auction and, as I will discuss further below, had a legitimate interest in the entire process being conducted fairly.
[68] As such, I am not prepared to accept Vidéotron’s invitation to find the Court has no jurisdiction to hear the application. Having said that, establishing standing, and proving unfairness, are two completely different matters.
(ii) TELUS’ Objections to the Affidavits of Messrs. Béland and Anderson
[69] As I do not find it necessary to refer at all to the affidavit of Vidéotron’s affiant, Mr. Béland, to dispose of this application, I will limit my comments on this issue to the impugned sections of the Anderson affidavit, namely, paragraphs 59-63, 65 and 68.
[70] TELUS argues that it was inappropriate for Mr. Anderson, a key ISED representative involved in the selection process, to provide the evidence contained in the impugned paragraphs of his affidavit which was commissioned approximately nine months after the Decision was made. TELUS cites Canada v. Kabul Farms Inc., 2016 FCA 143 at para 38 [Kabul Farms] and Leahy v. Canada (Citizenship and Imm

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Telus Communications Inc. v. Vidéotron Ltée Court (s) Database Federal Court Decisions Date 2022-05-17 Neutral citation 2022 FC 726 File numbers T-1335-21 Decision Content Date: 20220517 Docket: T-1335-21 Citation: 2022 FC 726 Toronto, Ontario, May 17, 2022 PRESENT: Mr. Justice Diner BETWEEN: TELUS COMMUNICATIONS INC. Applicant and VIDÉOTRON LTÉE, BELL MOBILITY INC., BRAGG COMMUNICATIONS INC., CITYWEST CABLE AND TELEPHONE CORP, COGECO CONNEXION INC., COMCENTRIC NETWORKING INC., ECOTEL INC., IRISTEL INC., LEMALU HOLDINGS LTD., 1085459 ONTARIO LTD. O/A KINGSTON ONLINE SERVICES, MULTIBOARD COMMUNICATIONS INC., 508896 ALBERTA LTD. O/A NETAGO, NEXICOM INC., ROGERS COMMUNICATIONS CANADA INC., SASKATCHEWAN TELECOMMUNICATIONS, SOGETEL INC., STAR SOLUTIONS INTERNATIONAL INC., TBAYTEL, TERRESTAR SOLUTIONS INC., THOMAS COMMUNICATIONS LTD., VALLEY FIBER LTD., FIBRENOIRE INC. AND XPLORNET COMMUNICATIONS INC. Respondents and ATTORNEY GENERAL OF CANADA Intervener JUDGMENT AND REASONS [1] This is a judicial review of the determination, made by a delegate of the Minister of Industry [the Minister], that Vidéotron ltée [Vidéotron] was eligible to bid on set-aside spectrum in the 2021 3500 MHz spectrum auction [the Auction]. Consistent with the prescribed process, the set-aside eligibility determination [the Decision] was made on April 21, 2021 and shared with Vidéotron, but did not become public until the results of the Auction were released by the Department of Innovation, Science and Economic Development Canada [ISED] on July 29, 2021. The spectrum in question is critical for the development of fifth generation [5G] technology standards of cellular networks for mobile phones and other technologies across Canada. [2] The Decision, which permitted Vidéotron to bid on and obtain set-aside spectrum in British Columbia, Alberta and Manitoba [together Western Canada], is now challenged by TELUS Communications Inc. [TELUS] on procedural and substantive grounds. For the reasons that follow, I find the set-aside eligibility assessment process and the Minister’s decision to have been fair and reasonable, and will dismiss the Application. I. Background A. Statutory Framework [3] Spectrum is a limited public resource that consists of electromagnetic waves of various frequencies, which facilitate the use of communication technologies and services including mobile phones, satellites, two-way radio and broadcasting. The Minister, to whom authority is conferred by the Department of Industry Act, SC 1995, c 1, the Radiocommunication Act, RSC 1985, c R-2 and the Radiocommunication Regulations, SOR/96-484, is responsible for spectrum management in Canada. Management of spectrum plays a critical role for Canada, fostering the growth of telecommunications and ensuring that radiocommunications services, from cellphones to air traffic control, are properly managed and free from interference. [4] Section 7 of the Telecommunications Act, SC 1993, c 38 sets out the objectives of Canadian telecommunications policy, which include: rendering reliable, affordable, high quality telecommunications services accessible to Canadians in all regions of Canada; enhancing efficiency and competitiveness; stimulating research and encouraging innovation; and, fostering increased reliance on market forces (for s 7, and other statutory provisions referenced in these Reasons, see Annex A). The Canadian Radio-Television and Telecommunications Commission [CRTC], as prescribed in Part III of the Telecommunications Act, regulates telecommunications services including the approval of rates and conditions of service. [5] Section 5(1) of the Radiocommunication Act confers broad powers on the Minister to, inter alia, issue licenses, fix and amend their terms and conditions, and to plan the allocation and use of spectrum. These licenses are critical to the operation of any mobile phone network and are issued from time to time to telecommunication service providers by way of auctions. The bidding process for the attribution of licenses is competitive and s 5(1.4) of the Radiocommunication Act allows the Minister to prescribe rules, standards and conditions applicable to the system of competitive bidding. B. Spectrum Licenses [6] Spectrum licenses allow their holders to use specified frequencies within defined geographic areas. Service areas are divided and further subdivided based on “tiers.” Tier 1 is a single national service area covering all of Canada. Tier 2 consists of 14 large service areas covering the entire country, and in some cases corresponds to an entire province. For instance, British Columbia, Alberta, and Manitoba are each distinct Tier 2 service areas. Tiers 3 and 4, by contrast, consist of smaller regional, and more localized service areas, respectively. Tier 2 and Tier 4 service areas were relevant for the determination of eligibility to bid on set-aside spectrum in the Auction. [7] The 2021 3500 MHz Auction was the latest in a series of four spectrum auctions that have taken place since 2008. The three prior auctions took place in the decade from 2008 through 2018, namely the ASW-1 (2008), ASW-3 (2015) and 600 MGz (2018) auctions. Consistent with the objectives of the Telecommunications Act, these spectrum auctions have included “pro-competitive measures”, intended to enhance competition among mobile phone service providers. The principles underlying the measures are found in Framework for Spectrum Auctions in Canada, published in 2011 by ISED (then Industry Canada). Spectrum caps, for example, impose limits on the width of spectrum a particular licensee can hold. [8] Spectrum set-asides, another pro-competitive measure, reserve a certain portion of spectrum for carriers who do not meet the definition of “national mobile service providers” [NMSPs]. An NMSP, by definition, holds more than 10% of the national market share. Currently, there are three NMSPs - TELUS, Bell and Rogers. [9] The specific criteria for eligibility to bid on set-aside spectrum has varied in the 2008, 2015, 2018 and 2021 auctions. In 2008, eligibility for set-aside spectrum was reserved to new entrants, defined as those who held less than 10% of national wireless market share based on revenue. In 2015, set-aside eligibility rules were much more specific. They varied depending on the service areas in question, and potential bidders needed to already be providing commercial mobile wireless services and demonstrate specific network coverage in each relevant service area. In 2018, eligibility requirements for set-aside spectrum related to the provision of services, but were less stringent and less detailed than in 2015. For example, while set-aside eligible bidders had to be providing commercial telecommunications service in the relevant Tier 2 service areas, there was no minimum customer threshold or level of coverage requirement. C. 2021’s 3500 MHz Spectrum Auction [10] The 3500 MHz band of spectrum, as mentioned above, is crucial for the deployment of 5G mobile technology standards for cellular networks. 5G provides opportunities for innovative, interconnected and data intensive applications, operating at higher speeds and providing increased bandwidth than prior standards. 5G requires large amounts of spectrum in a variety of frequency bands. [11] The process leading to the 2021 Auction and the impugned set-aside eligibility assessment process began in 2019. In June 2019, ISED announced a public Consultation on a Policy and Licensing Framework for Spectrum in the 3500 MHz Band. [12] Extensive consultations followed, involving broad participation by stakeholders across the country, including both TELUS and Vidéotron, which led ISED to make a series of policy decisions that would govern the Auction. In March 2020, ISED released the Policy and Licensing Framework for Spectrum in the 3500 MHz Band [the Framework]. This voluminous document sets out the policy underpinning of and ground rules for the Auction. The bidder application and qualification stage, which includes set-aside eligibility determinations (the subject of this judicial review); the bidding stage to obtain spectrum licenses; and the post-auction license renewal process, are all comprised within the Framework. [13] To promote competition for the Auction, the Framework implemented a set-aside of 50 MHz of spectrum, consisting of approximately 25% of the spectrum up for auction, to be reserved for eligible service providers (which excluded NMSPs). The Framework referred to prior use of set-asides having contributed to growth and competiveness of regional providers. The Framework also referred to findings of the Competition Bureau citing the market power possessed by NMSPs, the high barrier to entry in certain areas, and the lower prices enjoyed by customers in areas where regional providers had established market share. Paragraphs 36-44 of the Framework, in addition to other relevant excerpts referenced below, have been reproduced in Annex B to these Reasons. [14] Eligibility to bid on the set-aside spectrum was established in “Decision D2” of the Framework. Decision D2 limited set-aside eligibility to service providers meeting the following description: Eligibility to bid on set-aside spectrum will be limited to those registered with the CRTC as facilities-based providers that are not national mobile service providers, and that are actively providing commercial telecommunications services to the general public in the relevant Tier 2 service area of interest, effective as of the date of application to participate in the 3500 MHz auction. Services that are regulated under the Broadcasting Act will not be considered as “commercial telecommunications services” for the purposes of set-aside eligibility, however all services that are regulated under the Telecommunications Act may qualify. [Decision D2, para 64 of the Framework; emphasis added.] [15] It is important to note that the licenses were being issued for the more localized Tier 4 service areas, but the eligibility criteria above refer to a bidder providing services anywhere in the larger Tier 2 service area. A bidder interested in obtaining spectrum in the Tier 4 service area of Steinbach, Manitoba, for example, need only be actively providing commercial telecommunications services to the general public somewhere in the relevant Tier 2 service area of Manitoba, such as Winnipeg, to be eligible to bid on set-aside spectrum in Steinbach [16] In response to concerns raised as to how “general public” would be defined, the Framework clarified that it could include “businesses, enterprises and institutions in addition to traditional ‘residential customers’, and that ‘providers who are actively offering commercial telecommunications services to any of these consumers will be considered set-aside-eligible as long as they meet the additional eligibility criteria’” (at para 60, Framework). [17] In addition to set-aside spectrum, the Framework also imposed non-transferability measures. These were intended to ensure that set-aside licenses would not be transferrable to set-aside ineligible entities for at least five years of the license term, in order to strike a balance between deterring speculation – for example, by bidders intending to simply resell instead of actually deploying licenses – and awarding spectrum to entities who were positioned to use it. [18] Potential bidders applying for set-aside eligibility would be required to demonstrate their eligibility by providing relevant documentation to ISED describing 1) the services offered in the relevant area; 2) the retail/distribution network; and, 3) how subscribers access services and the number of subscribers in the area (para 64, Framework). [19] Section 12.5 of the Framework outlined that ISED would review the application forms and associated documents after the closing date for submissions of applications. During this initial review, ISED would identify any errors in the forms and determine whether any additional information related to affiliates or associated entities was required. For the purposes of set-aside eligibility applications, ISED would assess eligibility to obtain licenses in Tier 4 service areas based on the relevant Tier 2 service areas of interest. ISED could also make written requests for further information and could verify the information that was provided. Applicants who failed to comply with the written requests would be rejected. Rejected applications, including cases where a response to a request was received but found to nevertheless be deficient, would be returned to the Applicant (paras 435-440, Framework). [20] In December 2020, ISED published responses to questions, and updates about the Auction in Responses to Clarification Questions on the Policy and Licensing Framework for Spectrum in the 3500 MHz Band the [Clarification Document]. On March 15, 2021, the Clarification Document was updated to provide the following question and response regarding set-aside eligibility: QUESTION 3.3: How does being an affiliate affect an applicant’s set-aside-eligibility? RESPONSE 3.3: An applicant may be eligible to qualify as a set-aside-eligible bidder based on the eligibility of its affiliated entities or, where an applicant is a partnership, on the eligibility of the partners who control the applicant. As long as the applicant itself is not affiliated with or controlled by a national mobile service provider, and where one or more affiliates or controlling partners of the applicant is registered with the Canadian Radio-television and Telecommunications Commission (CRTC) as a facilities-based provider, that applicant may be qualified as set-aside-eligible to bid in all licence areas where an affiliate or controlling partner is actively providing commercial telecommunications services to the general public in the relevant Tier 2 service area, as set out in section 6.1 of the Framework. All applicants must disclose their affiliates and, where applicable, any controlling partners of the applicant in their application form. Applicants who wish to be considered as set-aside-eligible bidders will have to indicate and explain for each licence area, if they are directly eligible or through which affiliate or controlling partner, they are eligible. [Emphasis added.] [21] ISED’s assessment of applications was a closed process, as had been the case in previous spectrum auctions. This was to ensure the integrity of the 3500 MHz Auction, and to protect confidential information provided in the applications. The Clarification Document indicated that ISED would not release, to the public, post-auction documentation regarding where bidders applied, or the basis upon which successful applications were granted. Response 2.11 of the Clarification Document provided: …as in past auction processes, a list of all qualified bidders, along with information related to their beneficial ownership, affiliates, and associated entities, will be made public via ISED’s website in accordance with the timelines stated … The number of eligibility points, financial deposit amounts, and eligibility status, including set-aside eligibility, will not be published. ISED makes its rulings on applicant set-aside eligibility based upon the information provided by the applicant as assessed against the set-aside eligibility criteria in accordance with the Framework. [Emphasis added.] [22] However, in accordance with Response 2.11 above, ISED did release a list of all qualified bidders to the public, along with information about their beneficial ownership, affiliates and associated entities. D. The 3500 MHz Auction [23] The Auction ultimately generated revenue of $8.91 billion for the Government of Canada. [24] Vidéotron applied, and was ultimately determined eligible, to be a set-aside bidder in the Tier 2 service areas in question for this judicial review, Manitoba, Alberta and British Columbia, on the basis of services provided by its affiliate, Fibrenoire Inc. [Fibrenoire]. On July 29, 2021, Vidéotron was the successful bidder for 128 set-aside licenses across 45 license areas in Western Canada. [25] On August 3, 2021, TELUS wrote to ISED questioning the set-aside eligibility findings regarding Vidéotron and requesting a complete record of the material they filed. [26] ISED responded with an August 11, 2021 letter explaining the finding that, based on a review of Vidéotron’s application materials and verification of publicly available services, Vidéotron was eligible as a set-aside bidder in accordance with the Framework and Clarification Document. ISED also stated that in accordance with the prescribed process, it would not release Vidéotron’s documentation. [27] On August 26, 2011, TELUS commenced this application for judicial review. E. Procedural Background at the Federal Court [28] A motion for an interlocutory injunction to stay the issuance of the licenses to Vidéotron in Western Canada, brought in September 2021 by TELUS, was dismissed by Justice Grammond of this Court by Order and Reasons dated October 22, 2021 (Telus Communications Inc. v. Vidéotron Ltée, 2021 FC 1127 [Telus v. Vidéotron]). [29] The Minister proceeded to issue the licenses assigned through the 3500 MHz Auction on December 17, 2021. [30] The Attorney General of Canada [AGC] was granted leave to intervene in these proceedings, and initially did not produce a complete tribunal record due to confidentiality concerns expressed by Vidéotron. TELUS and Vidéotron each brought competing motions, for disclosure and confidentiality, respectively. Vidéotron’s motion was dismissed by an Order of Prothonotary Tabib, dated December 6, 2021, which circumscribed the disclosure process for confidential information. Vidéotron appealed this order. [31] Ultimately, the parties resolved their disagreement on consent and, on February 3, 2022, Justice Pentney issued a protective confidentiality Order pursuant to Rules 151 and 152 of the Federal Courts Rules, SOR/98-106. TELUS, Vidéotron and the AGC each thereafter provided a redacted public version, in addition to a confidential private version of their respective records. TELUS’ affiant, Mr. Mulvihill, was allowed to access and provide evidence based on the full record. Vidéotron and the AGC also presented affiants, Messrs. Dennis Béland and Daniel Anderson respectively, both of whom, like Mr. Mulvihill, annexed extensive evidence to their Affidavits. [32] The entire judicial review hearing proceeded in public before me, without any need to resort to in camera discussions. One of the other Respondents, Iristel Inc., provided their submissions in a public record, and without having had access to the confidential records of TELUS, Vidéotron and the AGC. Representatives of some of the other Respondents, along with other members of the public, also listened to the virtual hearing. [33] Mindful of these individuals, the open court principle, and in the interests of the administration of justice remaining public, no confidential information from any of TELUS, Vidéotron or the AGC’s confidential records is contained in these Reasons. As such, there are no redactions, nor any need for a confidential set of reasons to be released separately. II. Decision under Review A. Vidéotron’s Set-Aside Eligibility Application [34] Vidéotron’s set-aside eligibility application, which formed part of the broader application to participate in the Auction that was required of all prospective bidders, consisted of completing a series of standardized forms established by ISED, attaching supporting documentation, and submitting the completed application confidentially on April 5, 2021. [35] Vidéotron’s application confirmed that: Fibrenoire was an affiliate registered with the CRTC as a facilities-based provider, indicated all of the Tier 2 areas where Vidéotron wished to apply for set-aside eligibility, and identified all of the Tier 4 areas where it was already providing commercial telecommunications services to the general public. [36] Vidéotron also attached documentation marked as confidential to its application, which included detailed descriptions addressing how Vidéotron met the set-aside eligibility criteria, including: descriptions of the services offered by Vidéotron and Fibrenoire in their respective service areas as well as their sales and distribution networks, the numbers of clients served, and how those clients accessed their services. B. The Assessment and Verification Process [37] As indicated above, the Framework provided that ISED would review the completed forms and associated documents, assess eligibility and, if necessary, request further information and verify the information provided. [38] The AGC’s affiant, Daniel Anderson, a Manager in the Spectrum Licensing and Policy Branch at ISED, was responsible for the set-aside eligibility assessments of all applicants. He had also been responsible for leading the policy development for the 3500 MHz Auction. A form called “3500 MHz Auction Set-Aside Eligibility Assessment (Form 4)” the [Assessment Form] was used to record Mr. Anderson’s evaluations of the 19 applications for eligibility as set-aside bidders, between the application deadline of April 6, 2021 and April 22, 2021, at which point a list of qualified bidders would be published. [39] According to his Affidavit, Mr. Anderson began his assessment of Vidéotron’s set-aside eligibility on April 7, 2021, the day after the application deadline, entering information from the application directly onto the Assessment Form. He verified that both Fibrenoire and Vidéotron were indeed registered with the CRTC as facilities-based providers, which is reflected on the Assessment Form. [40] Vidéotron had indicated in its application that it qualified for set-aside in British Columbia, Alberta, and Manitoba through its affiliate, Fibrenoire. Vidéotron claimed that Fibrenoire had customers in each of these Western provinces as well as Northern Ontario, but did not indicate who or where they were. Mr. Anderson testified that he wanted to verify the information provided by Fibrenoire about their services, including their distribution network in Western Canada, but was unable to do so using their website. [41] As a result, Mr. Anderson states in his Affidavit that he asked Nancy Macartney, one of his ISED colleagues who was participating in the assessment and verification process, to contact Vidéotron to request further details. On April 9, 2021, Ms. Macartney sent a letter to Vidéotron through secure electronic post, citing the criteria set out in the Framework for establishing set-aside eligibility and requesting that detailed information be provided for each of four service areas, namely Northern Ontario, and the Western Canadian provinces at issue in this case - Manitoba, Alberta and British Columbia. [42] On April 12, 2021, Mr. Béland, a Vice-President of Regulatory Affairs at Quebecor Inc. and Vidéotron’s affiant in the present application, replied on behalf of Vidéotron. Mr. Béland’s reply provided a more detailed description of the various categories of services provided by Fibrenoire in Western Canada, a list of customers, and detailed explanations of how business customers accessed the services, how equipment was distributed and what particular services were provided to each customer. One excerpt of the letter, for instance, reads as follows: [translation] Fibrenoire is actively providing business telecommunications services to the general public in service areas 2-008, 2-009, 2-010, 2-012 and 2-013, as it currently provides symmetrical speed connectivity services over dedicated fibre links to retail business customers with commercial operations in these areas. In addition to these fibre connectivity services, a growing portion of Fibrenoire’s customers also subscribe to services such as wireless backup connectivity and over-the-top networking applications. . . . For each of the four categories of service provided, Fibrenoire ensures that the customer’s sites are connected to its backbone network through fibre access facilities (except for the minority of SD-WAN cases where coaxial cable or wireless facilities are used). Except in some areas of Toronto where Fibrenoire operates its own backbone Internet network, these fibre access facilities are sourced from business partners operating networks in the areas in question. However, even when it sources others’ fibre access facilities, Fibrenoire provides the equipment on the customer’s premises. Furthermore, in all cases, Fibrenoire is fully responsible for monitoring and managing the connectivity provided to the customer. Subject to the availability of adequate facilities from its business partners, Fibrenoire is ready to provide telecommunication services anywhere in the service areas . . . . . . When a new retail business customer contacts Fibrenoire for the first time, they are immediately assigned to a dedicated sales representative. This representative works with the customer to assess their needs, determine the most appropriate service category and negotiate a service contract. Typically, multi-year service commitments are required to ensure the most advantageous pricing. The assigned sales representative will then personally see to the delivery and installation of the equipment at the customer’s premises (see more details below) and will be available to the customer to resolve any activation issues that may arise. The sales representative also works with the customer on an ongoing basis to ensure that the service ordered continues to best meet the customer’s needs. Generally speaking, Fibrenoire’s dedicated sales representatives are physically located in Quebec, as Fibrenoire’s customers in the above-mentioned areas are most often branches of large Quebec companies that already have a well-established business relationship with the company. Nevertheless, Fibrenoire has a growing list of retail business customers headquartered outside of Quebec, who are well served by the Quebec-based sales experts. [43] To verify that new business customers could obtain services from Fibrenoire in Western Canada, Mr. Anderson deposes that he placed two anonymous calls to Fibrenoire, using a blocked number. First, he posed as a potential business client with offices in Vancouver and Calgary and asked if Fibrenoire could provide services. The next day, he placed a second call posing as a potential business client with offices in Winnipeg and Thunder Bay. In both cases, Fibrenoire responded that it could offer internet services but that it would not be through Fibrenoire’s own infrastructure, but rather arranged through third-party infrastructure. [44] At the end of the Assessment Form for Vidéotron, Mr. Anderson recommended that Vidéotron be granted set-aside eligibility in all the service areas where it applied, including Western Canada. For each of the Tier 2 service areas in Western Canada, Mr. Anderson indicated, “Provides OTT [over the top] services to businesses through affiliate Fibrenoire” and at the end of the form he wrote “Provides internet services to business through Fibrenoire as wholesaler.” [45] Mr. Anderson deposes that on April 19, 2021, after completing his assessment, he met with ISED’s Senior Director, Mathew Kellison [the Minister’s delegate]. Mr. Anderson states that he explained his assessment of the application, the response received to ISED’s written request, the verifications he had completed by telephone, and the rationale for his recommendation. He also states that Mr. Kellison indicated that he agreed that Vidéotron met the requirements for set-aside eligibility in each of the areas in which it had applied. [46] The Minister’s delegate made the Decision on behalf of the Minister on April 21, 2021, which is indicated on an internal document called “3500 MHz Auction Application Assessment Form” [the Compiled Assessment Form]. At the time the decision was made, the Minister’s delegate had the completed Assessment Form, all materials provided to ISED by Vidéotron (including the April 12 letter cited at para 42of these Reasons) and the Compiled Assessment Form before him on a USB key (as noted in a Response to Undertaking email from the AGC, at p. 1106 of the Applicant’s Record). [47] The next day, April 22, 2021, ISED published its list of qualified bidders. The findings on set-aside eligibility were shared with each applicant but were not made public prior to the auction, in accordance with the Framework and the Clarification Document. III. Issues and Analysis [48] TELUS submits two arguments in support of their application for judicial review. First, TELUS argues that the Minister failed to respect the duty of procedural fairness that was owed. According to TELUS, ISED failed to adhere to the procedure it established for itself, and failed also to maintain adequate records of the steps taken in the assessment of Vidéotron’s set-aside eligibility. [49] Second, TELUS submits that the decision of the Minister was unreasonable. It argues that ISED’s reasoning process was incoherent and lacked transparency, and that the determination could not be justified in light of the factual record and the Framework’s set-aside eligibility criteria. [50] TELUS argues that Vidéotron should be disqualified as a set-aside bidder in Western Canada, and that the spectrum licenses it won there should be revoked, and that a new auction should be held, for which Vidéotron should not be eligible to participate. [51] The Respondents and the Intervener assert, on the other hand, that there were no flaws in either the reasonableness or fairness of the set-aside eligibility determination, and that this application should be dismissed. A. Standard of Review [52] While the Parties and the Intervener disagree on the outcome of this application, they agree on the applicable standards of review. First, with respect to the issue of procedural fairness, the Court must ask whether, having regard to all the circumstances, the procedure was fair and just (Canadian Pacific Railway Company v. Canada (Attorney General), 2018 FCA 69 at paras 54-56 [CPR]; Ahousaht First Nation v. Canada (Indian Affairs and Northern Development), 2021 FCA 135 at para 31). [53] Such an assessment often involves a consideration of the non-exhaustive list of factors outlined by the Supreme Court in Baker v Canada (Minister of Citizenship and Immigration), 1999 CanLII 699 (SCC), [1999] 2 SCR 817 [Baker], and entails assessing “with a sharp focus on the nature of the substantive rights involved and the consequences for an individual, whether a fair and just process was followed” (CPR, at para 54). [54] The Parties also agree that the second issue entails considering whether the Minister’s decision was reasonable. In Canada (Minister of Citizenship and Immigration) v Vavilov, 2019 SCC 65 [Vavilov], the Supreme Court set out a revised framework to determine the standard of review, whereby reasonableness is the presumptive standard. The Parties agree that there is no reason to depart from the reasonableness standard in this case. B. Preliminary Issues [55] I will begin my analysis with two preliminary matters that were raised by Vidéotron and TELUS respectively, namely (i) TELUS’s lack of standing to bring the application, and (ii) the improper contents of the Anderson and Béland affidavits. [56] First, Vidéotron asserts that TELUS has no standing to bring this judicial review because, as an NMSP, TELUS was not entitled to participate in the Auction for set-aside spectrum, and thus has no direct interest in the matter. TELUS contests this argument, asserting that they were directly affected by the breach to their right to a procedurally fair process. The AGC takes no position on the issue, but as TELUS points out, the AGC does acknowledge that the Minister had at least a minimal duty of procedural fairness toward TELUS. [57] The second preliminary issue is TELUS’ argument that the Affidavit evidence of Messrs. Anderson and Béland was inappropriate and seeks to impermissibly add to the tribunal record (paras 59-63, 65 and 68 of the Anderson Affidavit and para 47 of the Béland Affidavit). (i) TELUS has direct standing to bring the application [58] Section 18.1(1) of the Federal Courts Act, RSC 1985, c F-7, states: 18.1 (1) An application for judicial review may be made by the Attorney General of Canada or by anyone directly affected by the matter in respect of which relief is sought. 18.1 (1) Une demande de contrôle judiciaire peut être présentée par le procureur général du Canada ou par quiconque est directement touché par l’objet de la demande. Vidéotron argues that TELUS, as an NMSP, had no right to bid for set-aside spectrum, the eligibility assessment determination which it challenges in this judicial review. [59] As a result, Vidéotron contends that TELUS is not directly affected by the matter in which it seeks relief. Vidéotron relies on Soprema Inc. v. Canada (Attorney General), 2021 FC 732 [Soprema], which in turn relies on CanWest MediaWorks Inc. v Canada (Health), 2007 FC 752 [CanWest] (aff’d 2008 FCA 207). Soprema and CanWest stand for the principle that for an applicant to be considered ‘directly affected’, the matter at issue must be one which adversely affects their legal rights, imposes legal obligations, or prejudicially affects them directly. Vidéotron relies on Soprema, and CanWest for the proposition that commercial or economic harm is not, in itself, sufficient to ground standing. [60] Vidéotron also relies on other cases refusing standing due to a lack of adverse impact to legal rights, including Novo Nordisk Canada Inc. v Canada (Health), 2019 FC 822 at paras 8-9, which held that commercial or economic harm is not sufficient to grant direct standing where the party’s legal rights are not affected and the party is not prejudiced. Similarly, Vidéotron relies on Ultima Foods Inc. v Canada (Attorney General), 2012 FC 799 [Ultima Foods] at paras 102-103, where a licence granted to a third party for the importation of yogurt was held not to impose rights or obligations on another party. [61] TELUS counters that having been an active participant both in the consultation and the bidding processes of the Auction, its legitimate expectations of procedural fairness were undermined by how the set-aside eligibility determination process unfolded. TELUS argues that Irving Shipbuilding Inc. v. Canada (Attorney General), 2009 FCA 116 [Irving] provides a complete answer to the standing issues. [62] TELUS acknowledges that it was not eligible to bid on set-aside spectrum, but nevertheless points out that it competed directly against Vidéotron during the phase of the auction which concerned the assignment of spectrum frequencies. TELUS notes that all the participants in the Auction had to apply to qualify, and set-aside eligibility determinations were simply one component of the broader application process in which all prospective bidders participated. As a participant in the Auction, TELUS contends that it has standing on the basis of its expectation of a fair process. [63] I agree that this is not a particularly compelling example of being directly prejudiced. It is especially telling that TELUS is not joined in pursuing this application by any of the set-aside eligible bidders who participated in the Auction, who would have had a relatively greater interest in seeing set-aside eligibility determinations being made fairly, and who would have been even more directly affected by bidding directly against Vidéotron for set-aside spectrum. Their silence in this application has not gone unnoticed. [64] Nevertheless, I find that TELUS has a sufficient basis to assert that its legal rights are affected, and to ground its standing to bring this Application, on account of its arguments regarding the procedural unfairness of the ISED process. Even if the content of the duty owed to it is found to be minimal, the fact that TELUS participated actively in the consultation leading to the Auction, and indeed, applied and participated in the Auction itself, there is no denying that they had a direct interest in the entirety of the Auction process being conducted fairly. In Irving, Justice Evans wrote at para 28: In my view, the question of the appellants’ standing should be answered, not in the abstract, but in the context of the ground of review on which they rely, namely, breach of the duty of procedural fairness. Thus, if the appellants have a right to procedural fairness, they must also have the right to bring the matter to the Court in order to attempt to establish that the process by which the submarine contract was awarded … violated their procedural rights. If [the government department] owed the appellants a duty of fairness and awarded the contract to [the contract bid winner] in breach of that duty, they would be “directly affected” by the impugned decision. If they do not have a right to procedural fairness, that should normally conclude the matter. [65] I note that in Ultima Foods, which Vidéotron relies on, the circumstances were distinguishable. There, the applicants, firms in the Canadian yogurt market, opposed import permits that allowed another Canadian yogurt processor to import yogurt into Canada. The Court did not accept that the applicants would be directly affected or experience prejudice as a result of the decision to grant the import permits, despite their claims that the decision threatened their businesses, and would reduce revenues and threaten the supply chain of Greek yogurt in Canada. The Court held the applicants did not have standing because they were only going to be impacted economically by the permits being awarded to the prospective yogurt importer. [66] Vidéotron further argues that Justice Grammond already dismissed TELUS’ economic arguments on the market distortion impact of the Auction in Telus v. Vidéotron,at paras 69-77. I agree with Justice Grammond’s finding as it pertains to his assessment of the irreparable harm component of an interlocutory injunction. However, I cannot agree that TELUS’ failure to establish irreparable harm in their injunction application amounts to a finding that the result of the Auction did not have any direct financial impact. The impossibility of predicting the outcome or quantifying the financial impact of an Auction scenario where Vidéotron was determined not to be eligible to bid on set-aside spectrum in Western Canada, does not inexorably lead to a finding that TELUS suffered no direct financial impact. [67] Furthermore, unlike Ultima Foods, TELUS was not simply a competitor on the sidelines of an administrative process that did not concern them. TELUS, though admittedly not eligible to bid on set aside spectrum, was nonetheless a direct participant in the broader Auction and, as I will discuss further below, had a legitimate interest in the entire process being conducted fairly. [68] As such, I am not prepared to accept Vidéotron’s invitation to find the Court has no jurisdiction to hear the application. Having said that, establishing standing, and proving unfairness, are two completely different matters. (ii) TELUS’ Objections to the Affidavits of Messrs. Béland and Anderson [69] As I do not find it necessary to refer at all to the affidavit of Vidéotron’s affiant, Mr. Béland, to dispose of this application, I will limit my comments on this issue to the impugned sections of the Anderson affidavit, namely, paragraphs 59-63, 65 and 68. [70] TELUS argues that it was inappropriate for Mr. Anderson, a key ISED representative involved in the selection process, to provide the evidence contained in the impugned paragraphs of his affidavit which was commissioned approximately nine months after the Decision was made. TELUS cites Canada v. Kabul Farms Inc., 2016 FCA 143 at para 38 [Kabul Farms] and Leahy v. Canada (Citizenship and Imm

Telus Communications Inc. v. Vidéotron Ltée

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Full judgment (source text)

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Telus Communications Inc. v. Vidéotron Ltée

Source text

Full judgment (source text)

Related cases

Klouvi c. Canada (Procureur général)

Canada (Minister of Citizenship and Immigration) v Vavilov

Doré v Barreau du Québec

Dunsmuir v New Brunswick

Baker v Canada (Minister of Citizenship and Immigration)

Roncarelli v Duplessis