On 13 July 2023, the European Court of Justice (ECJ) set aside the General Court’s judgment of 2020 annulling the European Commission’s (Commission) 2016 prohibition decision concerning the telecom merger in the United Kingdom and referred the case back to the General Court for a new review. 

On 11 May 2016, the Commission blocked, under Council Regulation (EC) No 139/2004 (EU Merger Regulation), a transaction between two of the four largest mobile-network operators in the United Kingdom. The Commission found that the transaction would have removed an important competitor in the United Kingdom mobile telephony market, and the merged entity would have faced competition only from two mobile network operators post transaction. This four-to-three merger would have resulted in a likely price increase for mobile telephony services in the United Kingdom and a restriction of choice for consumers. Following an action brought by the buyer, on 28 May 2020 the General Court annulled the Commission’s decision on grounds that the Commission had failed to prove that the transaction would have significantly impeded effective competition in the UK mobile telephony market. The Commission challenged this ruling and brought an appeal before the ECJ. 

In its ruling, the ECJ annulled the General Court’s judgment and held that the General Court made several errors in law in the interpretation of the EU Merger Regulation (the ECJ Judgment). The ECJ Judgment clarifies when transactions pose a “significant impediment to effective competition” under the EU Merger Regulation, the interpretation of key principles in the assessment of mergers between competitors, and the interpretation and use of economic evidence. In particular:

• The Commission is not required to carry out a particularly high standard of proof under the EU Merger Regulation to demonstrate that a notified transaction would significantly impede effective competition within the EU internal market. The General Court erred in law in holding that a significant impediment to effective competition can be established only if the Commission demonstrates that two cumulative conditions are met: (i) the elimination of important competitive constraints that the merging parties had exerted upon each other; and (ii) the reduction of competitive pressure on the remaining competitors.
• The General Court’s narrow interpretation of “important competitive force” is incorrect. For a company to qualify as an “important competitive force,” it is sufficient that it has more of an influence on the competitive process than what its market share or similar measures would suggest.
• The General Court did not properly interpret the framework for the assessment of efficiencies. The ECJ held that it is for the parties to demonstrate the standard efficiencies that the merger would generate and that the Commission is not obliged to include such standard efficiencies in the quantitative analysis of the effects of the transaction under review. 

Vice President Vestager, commissioner for competition, announced shortly after the ECJ Judgment that the ECJ Judgment’s importance “goes far beyond the specific circumstances and mobile telecommunications sector.” The ECJ Judgment confirms the Commission’s approach in assessing the impact of mobile mergers on oligopolistic markets when the creation or strengthening of a dominant position cannot be established. However, the full ramifications of the ECJ Judgment and its implications for transactions subject to review in other sectors remain to be seen.