The General Court of the European Union has annulled the EU’s decision to block the 2016 merger of Three and O2, reported The Financial Times.
A €10 billion deal to combine the two companies had been agreed by parent companies CK Hutchison and Telefonica in a transaction that would have created the UK’s largest mobile operator with 40 per cent of the market.
The two parties had argued that Three and O2 would struggle to compete independently as pure-play operators.
The EC blocked the deal on the grounds that it would damage competition in the UK market in 2016. It argued that in EU member states where the number of major players had been reduced from four to three, prices had risen for consumers. The EU feared the wholesale market would suffer, reducing choice for Mobile Virtual Network Operators (MVNOs).
The General Court upheld Three’s appeal stating that the evidence provided by the EC was not sufficient to demonstrate the detriment to competition or the disincentive to invest in infrastructure. It also said that Three’s share of the wholesale market wasn’t sufficient enough at the time to justify its concerns for MVNOs.
“In our appeal, we argued that the Commission’s approach to reviewing the proposed merger, and European telecoms mergers more broadly, was guided by a misconceived default view that European telecoms markets are better served by having a minimum of four Mobile Network Operators in each EU Member State,” said CK Hutchison.
“This approach ignores market realities, the clear evidence of successful market consolidation in Europe and across the world as well as the very significant efficiencies in terms of increased investment, network improvements and consumer benefits that can be achieved from mobile mergers.”
A spokeswoman for the commission told the FT, “The commission takes note of the General Court’s decision annulling the commission’s decision of 11 May 2016 prohibiting Hutchison’s proposed acquisition of O2 UK. The commission will carefully analyze the judgment.”
