General Court annuls EC’s decision which blocked merger of O2 UK and Three UK

29 May 2020

An EC decision to block the merger of British mobile network operators (MNOs) O2 UK and Three UK back in 2016 on competition grounds has been overturned by the General Court of the European Union.

With Three UK having challenged the decision to bar its merger with O2 UK, the General Court has announced that it has upheld this legal action and annulled the decision. While the EC had suggested the proposed tie-up could lead to an increase in the cost of mobile services in the UK – as the number of MNOs would have been reduced from four to three – the General Court adjudged that ‘the effects of the operation on prices and on the quality of services for consumers have not been proved to the requisite legal standard’. Further, the court’s ruling argued that EC had made ‘several errors of law and assessment’ in reaching its decision, while saying it had determined that the EC had ‘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’.

An appeal to the General Court’s ruling, ‘limited to points of law only’, can be brought before the Court of Justice against the within two months and ten days of notification of the decision.

In response to the development, Three UK’s parent company CK Hutchison issued a statement welcoming the ruling, and noted: ‘The [EC’s] approach has unfortunately acted as a brake on, or in a number of cases prevented, vital industry consolidation in Europe which would have resulted in significant new investment, innovation and benefits for European consumers and industry … Following the Court’s findings, the Commission will need to fundamentally revisit its approach to merger reviews in this key sector.’ Commenting on the matter, meanwhile, Telefonica said it ‘notes the EU Court’s decision, but … has moved on’.

United Kingdom, CK Hutchison, Hutchison 3G UK (Three UK), O2 UK, Telefonica