In a ruling handed down on Thursday 13 July in case C-376/20 P (see EUROPE 13047/23), the Court of Justice of the European Union overturned a decision by the European Commission (see EUROPE 12495/30) not to authorise the proposed merger through the acquisition of Telefónica Europe by Hutchison 3G UK Investments, now CK Telecoms UK Investments Ltd 3. The case is referred back to the General Court.
In its judgment, the Court found that the General Court had committed numerous errors of law, in particular by applying an interpretation of the requirement to prove significant impediments to effective competition that did not derive from the Merger Control Regulation (Regulation EC/139/2004).
The Court also stated that the General Court erred in law by adopting a restrictive interpretation of the Commission’s demonstration of the existence of a significant impediment to effective competition, in the absence of the creation or strengthening of a dominant position following a concentration on an oligopolistic market. The General Court had ruled that, in this context, the Commission could only establish the existence of a significant impediment to effective competition if it demonstrated that two cumulative conditions had been met: the elimination of the important competitive constraints that the merging parties exerted on each other and the reduction of competitive pressures on other competitors.
In the Court’s view, this restrictive interpretation is contrary to the spirit of the Merger Regulation and is not suited to the implementation of effective merger control.
In addition, the Court of Justice found that the General Court had not exceeded the limits of its judicial review in interpreting the concepts of “important competitive force” and “close competitors”. However, according to the judges, the General Court distorted the Commission’s arguments regarding the exact value of the price increase likely to result from the proposed transaction.
The Court ruled that it did not have the necessary information to give a final ruling on all the arguments raised at first instance. It therefore concluded that the nature and scope of the errors committed by the General Court were such that consideration of the pleas relied on required the General Court to carry out a new analysis of these pleas.
The European Commissioner for Competition, Margrethe Vestager, welcomed the fact that the Court had validated the Commission’s assessment of merger control and, in particular, that it had confirmed several important elements of the Commission’s approach to establishing the existence of a significant impediment to effective competition in the absence of the creation or strengthening of a dominant position on an uncompetitive market.
Margrethe Vestager also welcomed the Court’s clarification of the standard of proof to be provided by the Commission when assessing a merger.
Link to the judgment: https://aeur.eu/f/82g (Original version in French by Émilie Vanderhulst)