EU court finds no harm in Hutchison/O2 UK tie-up

The General Court of the European Union (EU) annulled a 2016 decision by the European Commission (EC) [1] to block CK Hutchison’s proposed acquisition of O2 UK, after ruling a merger would not affect competition, pricing and service quality in the market.

In a press release, the court noted it did not find enough evidence to back EC’s concerns that a merger between CK Hutchison’ Three operations and O2 UK would lead to increased prices and that the concentration would negatively impact other operators’ ability to compete on price, innovation and network quality.

It added that “the mere effect of reducing competitive pressure on the remaining competitors” was not sufficient to show “a significant impediment to effective competition” in the UK market.

The EU judicature noted the proposed takeover would not pose risk to the future development of the mobile network infrastructure in the country.

The body found that “neither Three’s wholesale market shares nor their recent increase justify its classification as an ‘important competitive force’”, adding the fact that Three had more of an influence on competition than its market share would suggest was not sufficient to lead to significant impediment to effective competition.

On 11 May 2016 the Commission blocked CK Hutchison’s proposed £10.5 billion acquisition of O2 UK over concerns that reduction of competitors would have led to pricing increases, restricted customer choice and risk for innovation in the mobile sector.

The General Court of the European Union made its ruling after Three asked the EC’s decision to be annulled.

EC approach
In a statement, CK Hutchison welcomed the court’s judgement, adding the Commission’s approach has “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”.

The operator stated the EC’s stance ignored market realities and “the clear evidence of successful market consolidation in Europe and across the world”, adding the Commission would need to “fundamentally revisit” its viewpoint to merger reviews.

[1] https://www.mobileworldlive.com/featured-content/home-banner/european-commission-blocks-hutcho2-tie-up/

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