Frontier Economics supports a landmark General Court win – a successful appeal by CK Hutchison Holdings (operating as Three in the UK) to acquire Telefónica Europe PLC (operating as O2 UK).
The Frontier Economics team, led by Zoltan Biro and Dave Foster, supported Freshfields Bruckhaus Deringer LLP in advising CK Hutchison Holdings (“CK Hutchison”).
In 2016 the European Commission blocked CK Hutchison’s bid to purchase O2 UK in a £10.25bn deal, over concerns that customers in the UK would have less choice and higher prices.
On 28 May, the General Court of the EU annulled the Commission’s decision, following an appeal by CK Hutchison. Importantly, it is the first judgment on the legal test under the EU Merger Regulation and the Commission’s Horizontal Merger Guidelines.
The decision has significant implications for the Commission’s approach to merger control and the future of four-to-three telecoms mergers.
The General Court’s key findings included:
- “The Commission’s application of the assessment criteria of the so-called ‘unilateral’ (or ‘non- coordinated’) effects – namely, the concept of ‘important competitive force’, the closeness of competition between Three and O2 and the quantitative analysis of the effects of the concentration on prices – is vitiated by several errors of law and of assessment.”
- “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.”
- “The Commission’s quantitative analysis of the effects of the concentration on prices does not establish, with a sufficiently high degree of probability, that prices would increase significantly.”
- “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 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.”
Frontier Director Dave Foster comments: “The General Court judgment is of major significance for all clients who interact with EU merger control. In many important areas it sets a new benchmark against which future mergers in the EU will need to be assessed.”
Frontier regularly advises clients on a wide range of competition and telecoms topics.
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