The ISP might be doing it knowing you're connecting to Netflix.
But if you do a VPN, they don't know those specific packets are going to Netflix, so they can't shape the packets.
They certainly can shape any traffic you cause to transit their network. What you mean is they can't selectively shape that traffic. But then why would they want to do that?
If they can degrade your traffic from 1080p to 720p without a customer complaining, then they don't need to expand their network to support more users which increases their profit margins.
