On October 20, 2022, Advocate General Kokott issued her opinion on the Commission’s appeal of the General Court’s landmark May 2020 judgment overturning the Commission’s prohibition of the Three/O2 UK mobile telecommunications merger. The Opinion advises the Court of Justice to uphold the Commission’s appeal on all main grounds and refer the case back to the General Court for reconsideration.
The case represents the first opportunity for the Court of Justice to rule on the concept of “significant impediment to effective competition” (“SIEC”) as it relates to non-coordinated (unilateral) effects in an oligopolistic market.
In 2016, the Commission prohibited the merger of the second and fourth largest mobile network operators in the UK, because it would have provided the merged entity with a “strong [market] position” even though it would not have created or strengthened a dominant position. On May 28, 2020, the General Court annulled the Commission’s decision in its entirety, essentially on the ground that the Commission did not provide “sufficient evidence to demonstrate with a strong probability” that the transaction would lead to a SIEC based on the loss of competition between the merging parties. The Commission appealed this judgment to the Court of Justice.
Advocate General’s Opinion
The Opinion is of particular interest in relation to the concepts of standard of proof, SIEC, closeness of competition, and important competitive force, indicating that the General Court may have erroneously put forward its own interpretation of these concepts, unsupported by case law or the Horizontal Merger Guidelines.
Standard of Proof
The Opinion refers to the Court of Justice’s judgment in Bertelsmann and Sony establishing the relevant standard of proof in merger cases as a “balance of probabilities”, requiring the Commission to predict the outcome that is “most likely to ensue,” and not one that is “very probable” or “particularly likely” or established “beyond reasonable doubt”. By contrast, the Opinion notes, the General Court erroneously required the Commission to produce sufficient evidence to demonstrate a “strong probability” that a concentration will give rise to harm, recognizing that that standard lies between a balance of probabilities test and a requirement of proof beyond a reasonable doubt.
The General Court held that, in the absence of a finding that a concentration will create or strengthen a dominant position, to prove a SIEC the Commission must establish that the concentration would involve: (i) the elimination of important competitive constraints that the merging parties had exerted upon each other; and (ii) a reduction of competitive pressure on the remaining competitors.
The Opinion notes that that approach is “too restrictive” and would prevent the Commission from taking account of all relevant circumstances affecting competition in an oligopolistic market. The SIEC concept ought to be more flexible than established by the General Court.
Closeness of competition
The Commission had established that Three and O2 were close, but not “particularly close,” competitors. The General Court observed that in oligopolistic markets, all competitors are likely to be relatively close, and therefore the Commission must show that the merging parties are “particularly close” competitors.
However, the Opinion notes that closeness of competition is only one of the factors that the Commission considered in respect of its theory that the concentration would have eliminated an important competitive constraint. The Commission’s Horizontal Merger Guidelines recognise that closeness of competition is a matter of degree, and neither the Guidelines nor the EU Merger Regulation require that the merging parties be particularly close competitors in order to establish the elimination of important competitive constraints, or a SIEC.
Important competitive force
The General Court found that the Commission had erred in finding that Three constituted an “important competitive force” because it did not stand out from its competitors. The Opinion notes, however, that an important competitive force does not need to stand out from its competitors “in terms of its impact on competition or be ‘competing particularly aggressively in terms of prices’, forcing those competitors to align with its prices”.
The Advocate General’s position on the standard of proof is unsurprising because the General Court arguably deviated from long-established Court of Justice case law. This is further evident from the subsequent judgment in Thyssenkrupp, where the General Court reverted back to the balance of probabilities test. Similarly, the interpretations of the concepts of SIEC and closeness of competition have little support in the Horizontal Merger Guidelines, which may persuade the Court of Justice to follow the Opinion.
 European Commission v. CK Telecoms UK Investments Ltd (Case C-376/20 P), opinion of Advocate General Kokott, EU:C:2022:817.
 Christopher J. Cook, “Advocate General Sides with Commission in its Appeal of General Court’s Overturning of Three/O2 Prohibition”, Cleary Antitrust Watch Blog, October 24, 2022, available here.
 Hutchinson 3G UK / Telefonica UK (Case COMP/M.7612), Commission decision of September 29, 2016, para. 406.
 CK Telecoms UK Investments Ltd v. Commission (Case T-399/16) EU:T:2020:217.
 Bertelsmann and Sony v. Impala (Case C-413/06 P) EU:C:2008:392, para. 52.
 European Commission v. CK Telecoms UK Investments Ltd (Case C-376/20 P), opinion of Advocate General Kokott, EU:C:2022:817, para. 56
 Hutchinson 3G UK/Telefonica UK (Case COMP/M.7612), Commission decision of September 29, 2016, para. 444.
 CK Telecoms UK Investments Ltd v. Commission (Case T-399/16) EU:T:2020:217, paras. 173–175.
 European Commission v. CK Telecoms UK Investments Ltd (Case C-376/20 P), opinion of Advocate General Kokott, EU:C:2022:817, para. 108.