The EU General Court ruled against the Commission on Thursday 28 May in its decision on the proposed acquisition of Telefónica UK by Hutchison 3G UK (or 'Three') in the mobile telephone market, an acquisition that it had blocked on 11 May 2016 under merger regulations.
According to the European Commission, the takeover would have resulted in the elimination of an important competitor on the market and the merged entity would have faced competition from only two operators, Everything Everywhere (EE) and Vodafone.
This shift from four to three competitors would have then resulted in higher prices and limited choice for consumers, an analysis (challenged by Three) that the EU General Court invalidated on 28 May.
The General Court first found that the effects of the transaction on prices and service to consumers had not been proven “in law and in line with the threshold of required proof”. The European Commission's assessment was based on the consideration that the takeover would have eliminated competition between two strong players in the UK market, one of which, Three, would become a major driver of competition in the UK market while the other, O2, would hold a strong position.
However, the General Court found that the Commission had incorrectly analysed the concept of 'important driver of competition', exhibiting several errors of law and of assessment. The General Court acknowledges that the merger regulations do indeed allow the Commission to prohibit concentrations in certain circumstances, but “the effect of reducing competitive pressure on other competitors alone is, in principle, not in and of itself sufficient to demonstrate a significant impediment to effective competition”.
The European Commission also failed to establish with a sufficiently high degree of probability that prices would increase significantly and “neither Three's wholesale market shares nor their recent increase justify qualifying it as an 'important driver of competition'”.
Link to the judgment: https://bit.ly/2zGuymd (Original version in French by Solenn Paulic)