General Court Landmark Ruling in Three/O2 Commission Prohibition

On 28 May 2020 the General Court handed down its ruling in CK Telecoms UK Investment Ltd v European Commission (Case T-399/16) in which it annulled the EU Commission’s decision which prohibited the proposed acquisition by CK Hutchison Holdings Ltd (Hutchison) of Telefónica Europe plc (O2). The proposed transaction would have brought together two of the UK’s four mobile network operators (MNOs), Three and O2.

The judgment is a landmark ruling for EU merger control with a wider significance beyond the telecommunications sector. It provides helpful guidance on the application of the significant impediment to effective competition (SIEC) test of the EU merger regulation (EUMR) and, in particular, its application to so-called “gap cases”, i.e. mergers in oligopolistic markets where the merger does not result in the creation or strengthening of a dominant position.

The ruling is a setback for the Commission’s policy on merger control, which has in recent years taken a harder line under Competition Commissioner Vestager. The General Court upheld Hutchison’s complaints on each of the three theories of harm deployed by the Commission. In doing so, the General Court has significantly raised the bar for the Commission both in terms of the substantive threshold and the evidentiary basis it needs to meet before it is able to prohibit a merger.

Read the full briefing here.

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