JUDGMENT IN THE CK TELECOMS UK INVESTMENTS v COMMISSION CASE

Judgment in Case T-399/16 CK Telecoms UK Investments v Commission

08.06.2020

The General Court has already annulled the Commission’s decision to block the proposed acquisition of Telefónica UK by Hutchison 3G UK in the sector of the mobile telephony market.

On 11 May 2016, the Commission adopted a decision in which it blocked, under the Merger Regulation, the proposed acquisition of Telefónica UK (‘O2’) by Hutchison 3G UK on the ground that the acquisition would have removed an important competitor on the United Kingdom mobile telephony market and the merged entity would have faced competition only from two mobile network operators, Everything Everywhere (EE), belonging to British Telecom, and Vodafone.

Moreover, according to the Commission, the acquisition would also have been likely to have a negative influence on the quality of services for consumers and it would have reduced the number of mobile network operators wishing to host other mobile operators on their networks.

The General Court uphold the action and annuls the Commission’s decision based on three reasons.

Firstly, the Court acknowledges that the Merger Regulation allows the Commission to prohibit, in certain circumstances, on oligopolistic markets concentrations, however,  the mere effect of reducing competitive pressure on the remaining competitors is not, in principle, sufficient in itself to demonstrate a significant impediment to effective competition in the context of a theory of harm based on non-coordinated effects.

Secondly, according to the Court, the Commission failed to show that the effects of the concentration on the network-sharing agreements and on the mobile network infrastructure in the UK would constitute a significant impediment to effective competition. The Court finds that a possible misalignment of the interests of the partners in a network-sharing agreement, a disruption of the pre-existing network-sharing agreements, or even the termination of those agreements do not constitute, as such, a significant impediment to effective competition in the context of a theory of harm based on non-coordinated effects.

Lastly, the Court notes that the effects of the concentration on the wholesale market were not found to be sufficient to establish the existence of a significant impediment to effective competition. The Court finds that neither Three’s wholesale market shares nor their recent increase justifies its classification as an ‘important competitive force’. The mere fact that Three had more of an influence on competition than its market share would suggest is not sufficient to establish the existence of a significant impediment to effective competition, particularly as it was not disputed that Three’s market share was small.

In this context, The General Court annuls the Commission’s decision to block the proposed acquisition of Telefónica UK by Hutchison 3G UK in the sector of the mobile telephony market.

You can read the text of the Decision here.

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Zumbul Attorneys-at-Law

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