The Court found that the evidence put forward by the Commission was insufficient.
Background: On 11 May 2016, the European Commission blocked the proposed merger between the UK mobile operators Three and O2. The EC considered that the reduction from four to three operators would have led to an increase in prices for mobile services in the UK and a restriction of choice for consumers. The acquisition would have also had negative effects on the quality of services for consumers, and would have hindered the development of mobile network infrastructure in the UK, and reduced choice for MVNOs seeking access to mobile operators’ networks. At the time, the UK Competition and Markets Authority (CMA) broadly agreed with the EC’s view, and considered there would be “long-term damage” to the UK mobile market as a result of the merger.
The ECJ annuls the decision: The EC’s decision was appealed by Three’s owner, CK Hutchison, which brought an action before the European Court of Justice (ECJ). On 28 May 2020, the ECJ annulled the EC’s decision, arguing that no sufficient evidence was produced of harm to consumers through higher prices and reduced quality of service. The court found errors of law and of assessment in the concept of ‘important competitive force’ applied to Three, the closeness of competition between Three and O2, and quantitative analysis of the effects of the concentration. The Court dismissed the EC’s argument that the participation of the two operators in separate network sharing agreements would have had negative effects for competition and deployment of mobile infrastructure, and disagreed on the possible negative impact for MVNOs given Three’s small share in the wholesale market.
A pyrrhic victory for Three? This victory is arguably of little use to Three now, given how the UK market has changed since 2016. O2 is now officially in talks for a merger with Virgin Media, which means a second attempt to merge O2 and Three could only happen if the Virgin Media deal fell through. Also, while the EC would not have a say in a new proposed merger due to the UK leaving the EU, the CMA would need to take a different stance compared to the one it had in 2016 for the merger to be approved.
