JUDGMENT OF THE GENERAL COURT (First Chamber, Extended Composition)

28 May 2020 ( *1 )

(Competition — Concentrations — Wireless telecommunications — Retail market for mobile telecommunication services — Market for wholesale access and call origination on public mobile networks — Acquisition of Telefónica Europe by Hutchison — Decision declaring the concentration incompatible with the internal market — Oligopolistic market — Significant impediment to effective competition — Non-coordinated effects — Burden of proof — Standard of proof — Market shares — Effects of the merger on prices — Quantitative analysis of upward pricing pressure — Close competitors — Important competitive constraint — Important competitive force — Network-sharing agreements — Level of concentration — Herfindahl-Hirschmann Index — Error of law — Error of assessment)

In Case T‑399/16,

CK Telecoms UK Investments Ltd, established in London (United Kingdom), represented by T. Wessely, O. Brouwer, lawyers, A. Woods, M. Davis, I. Ditchfield, S. Prichard, J. Aitken, R. Romney, M. Dickson and K. Asakura, Solicitors, and B. Kennelly QC,

applicant,

v

European Commission, represented by T. Christoforou, G. Conte, M. Farley, J. Szczodrowski and C. Urraca Caviedes, acting as Agents,

defendant,

supported by

United Kingdom of Great Britain and Northern Ireland, represented by S. Jones, S. Brandon, S. Huijts, C. Blairs, M. Rahman, J. McInnes, M. Brown, B. Potterill, S. Cardell, C. Brannigan, S. Munday, C. Short and A. Dadley, Agents, and R. Williams and J. Morrison, Barristers,

and by

EE Ltd, established in Hatfield (United Kingdom), represented by A. Lindsay, Barrister, C. Chapman and J. Hulsmann, Solicitors,

interveners,

APPLICATION under Article 263 TFEU for the annulment of Commission Decision C(2016) 2796 final of 11 May 2016 declaring incompatible with the internal market the concentration resulting from the acquisition of Telefónica Europe Plc by Hutchison 3G UK Investments Ltd (Case COMP/M.7612 — Hutchison 3G UK/Telefónica UK),

THE GENERAL COURT (First Chamber, Extended Composition),

composed of M. van der Woude, President, E. Buttigieg, P. Nihoul, J. Svenningsen and U. Öberg (Rapporteur), Judges,

Registrar: S. Bukšek Tomac, Administrator,

having regard to the written part of the procedure and further to the hearing on 2 and 3 May 2019,

gives the following

Judgment

I. Background to the dispute

1 On 11 September 2015, the European Commission received notification, in accordance with Article 4 of Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ 2004 L 24, p. 1), of a proposed concentration whereby CK Hutchison Holdings Ltd was to acquire, through the intermediary of its indirect subsidiary Hutchison 3G UK Investments Ltd, which is now the applicant, CK Telecoms UK Investments Ltd, in the manner described in Article 3(1)(b) of the abovementioned regulation, sole control over Telefónica Europe Plc (‘O2’).

2 At the time of the facts which gave rise to this case, there were, on the retail market for mobile telecommunication services in the United Kingdom (‘the retail market’), four mobile network operators: EE Ltd, which is a subsidiary of BT Group plc, acquired by BT Group plc in 2016 (together ‘BT/EE’), O2, Vodafone and Hutchison 3G UK Ltd (‘Three’), an indirect subsidiary of CK Hutchison Holdings, whose market shares, in terms of subscribers, were approximately [between 30 and 40%], [between 20 and 30%], [between 10 and 20%], and [between 10 and 20%] respectively. The concentration which is the subject of the present dispute (‘the operation’, ‘the concentration’ or ‘the transaction’) would have enabled the entity resulting from the concentration, a merger of Three and O2 (together ‘the parties to the concentration’) to account for approximately [between 30 and 40%] of the retail market and thus to become the main player on that market, ahead of the former legacy operator BT/EE and Vodafone.

3 In addition to these mobile network operators, the retail market also included several mobile virtual network operators, such as Tesco Mobile, Virgin Mobile and TalkTalk, which do not own the networks they use in order to provide mobile services to United Kingdom consumers and which had therefore concluded agreements with one or other mobile network operator so as to have access to its network at wholesale prices. Tesco Mobile is owned in equal shares by Tesco and O2. The retail market also included branded resellers (together with the mobile virtual network operators referred to as ‘non-MNOs’) and independent retailers, such as Dixons.

4 One particular characteristic of the retail market was that BT/EE and Three, on the one hand, and Vodafone and O2, on the other, had shared their networks through network-sharing agreements. This has enabled BT/EE and Three (under the MBNL joint venture, ‘MBNL’) and Vodafone and O2 (under the so-called ‘Beacon’ agreements, ‘Beacon’), to share the costs of rolling out their respective networks while continuing to compete on retail trade.

5 On 2 October 2015, the United Kingdom requested, through the intermediary of its national competition authority, the Competition and Markets Authority, that the concentration be referred to it, pursuant to Article 9(2)(a) of Regulation No 139/2004. In that request, the United Kingdom expressed the view that the concentration threatened significantly to impede competition on the retail market and on the market for wholesale access and call origination on public mobile networks in the United Kingdom (‘the wholesale market’). The United Kingdom also considered that it was the best placed to deal with the concentration.

6 On 4 December 2015, the Commission adopted Decision C(2015) 8534 final concerning Article 9 of Regulation No 139/2004 in Case M.7612 Hutchison 3G UK/Telefónica UK, by which it rejected that referral request. In that decision, it considered in particular that it was necessary for it to ensure a coherent and consistent approach when assessing mergers in the telecommunications sector in various Member States and it also referred to the considerable expertise it had gained in the assessment of concentrations in the European mobile telecommunications markets.

7 After the phase I investigation, the Commission concluded that the transaction raised serious doubts as to its compatibility with the internal market and on 30 October 2015 it adopted a decision to initiate the procedure under Article 6(1)(c) of Regulation No 139/2004.

8 On 4 February 2016, on the basis of the phase II investigation, which supplemented the findings of the phase I market investigation, the Commission issued a Statement of Objections. The applicant submitted its written observations on the Statement of Objections on 26 February 2016.

9 In order to address the competition concerns identified in the Statement of Objections, the applicant submitted a first set of commitments on 2 March 2016

10 At the applicant’s request, an oral hearing was held on 7 March 2016.

11 On 15 March 2016, the applicant submitted revised commitments (‘the Second Commitments’). On 18 March 2016 the Commission launched a market test of the Second Commitments, in which it consulted, first, current and potential providers of mobile telecommunication services in the United Kingdom, providers of infrastructure services in the mobile telecommunications sector, and the associations MVNO Europe and iMVNOx and, second, national telecommunications regulators, including the United Kingdom telecommunications regulatory authority (‘Ofcom’). In addition, the national competition authorities of the United Kingdom, Germany, and the Netherlands provided their views on the Second Commitments.

12 On 17 and 23 March 2016, the Commission sent the applicant letters in which it pointed to additional evidence in its file in support of the preliminary findings of the Statement of Objections. On 29 March 2016 and 4 April 2016 the applicant submitted written observations on the letters of facts of 17 and 23 March 2016 respectively.

13 On 6 April 2016, following the market test, the applicant submitted a further revised set of commitments

14 The Advisory Committee on Concentrations discussed the draft of the Commission’s decision on 27 April 2016 and issued a favourable opinion.

15 On 11 May 2016, the Commission adopted Decision C(2016) 2796 final declaring the concentration incompatible with the internal market (Case COMP/M.7612 — Hutchison 3G UK/Telefónica UK) (‘the contested decision’).

16 A summary of the contested decision was published on 29 September 2016 in the Official Journal of the European Union (OJ 2016 C 357, p. 15).

II. Contested decision

17 In the contested decision, the Commission defined the two relevant markets: the retail market and the wholesale market.

18 The Commission developed three theories of harm, all of which were based on the existence of ‘non-coordinated’ effects on an oligopolistic market.

19 The first two theories of harm relate to the retail market, while the third relates to the wholesale market.

20 More specifically, the first theory of harm relates to the existence of non-coordinated effects on the retail market arising from the elimination of important competitive constraints. In essence, according to the Commission, the sharp reduction in competition which would have resulted from the operation would probably have led to an increase in prices for mobile telephony services in the United Kingdom and a restriction of choice for consumers.

21 According to the second theory of harm, which relates to the existence of non-coordinated effects on the retail market relating to network sharing, the transaction would also be likely to have a negative influence on the quality of services for United Kingdom consumers, hindering the development of mobile network infrastructure in the United Kingdom.

22 The third theory of harm relates to the existence of non-coordinated effects arising from the elimination of important competitive constraints on the wholesale market. On this market, the four mobile network operators provide hosting services to non-MNOs, which in turn offer retail services to subscribers. In particular, according to the Commission, the acquisition is likely to have significant non-coordinated effects on the wholesale market resulting from a reduction in the number of mobile network operators from four to three, the elimination of Three as an important competitive force, the removal of important competitive constraints which the parties had previously exerted upon each other, and a reduction of competitive pressure on the remaining players.

23 As regards the efficiencies alleged by the applicant, the Commission found that they were not verifiable, were not specific to the concentration and were unlikely to benefit consumers.

24 In the final section of the contested decision, the Commission examined the remedies proposed by the applicant in the form of commitments. The Commission found that the Second Commitments did not eliminate the competition concerns identified and that the Third Commitments, proposed on 6 April 2016, did not eliminate the competition concerns identified and were not comprehensive and effective in all respects.

25 Consequently, the Commission declared the operation to be incompatible with the internal market.

III. Procedure

26 By application lodged at the Court Registry on 25 July 2016, the applicant brought the present action.

27 In its application, the applicant requested the adoption of a measure of organisation of the procedure or of a measure of inquiry requesting the Commission to submit to the Court certain information in its file necessary for the Court’s examination of the case but confidential vis-à-vis the applicant, to which only the applicant’s lawyers or external economic advisers had had access during the administrative procedure.

28 By documents lodged at the Court Registry on 1 December 2016, BT/EE and the United Kingdom applied for leave to intervene in these proceedings in support of the form of order sought by the Commission.

29 By documents lodged at the Court Registry on 21 December 2016 and 5 January 2017 respectively, the Commission and the applicant submitted their observations on the applications of BT/EE and of the United Kingdom for leave to intervene.

30 On 31 January 2017, the Commission lodged its defence.

31 In its defence, the Commission stated that it had no objections to producing the documents which were the subject of the request made in the application for a measure of organisation of the procedure or a measure of inquiry, provided that appropriate confidentiality measures were taken, in accordance with Article 103(3) of the Rules of Procedure of the General Court.

32 On 31 January 2017, the applicant lodged at the Court Registry requests for confidential treatment and non-confidential versions of the application for (i) BT/EE and (ii) the United Kingdom.

33 By orders of 16 March 2017, the President of the First Chamber of the General Court granted BT/EE and the United Kingdom leave to intervene in support of the form of order sought by the Commission and to receive a non-confidential version of each procedural document served on the main parties, the decision on the merits of the requests for confidential treatment being reserved.

34 By order of 16 March 2017, the General Court directed the Commission to produce the documents which were the subject of the request made in the application for a measure of organisation of the procedure or a measure of inquiry. The Commission produced those documents on 3 April 2017.

35 On 17 March 2017, in the context of the measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, the Court requested the applicant to submit a new version of its request for confidential treatment with regard to BT/EE.

36 By letter of 17 March 2017, the Court Registry informed the parties that the decision on the second round of pleadings was being reserved.

37 On 31 March 2017, the applicant lodged at the Court Registry a new version of its request for confidential treatment with regard to BT/EE, along with requests for confidential treatment and non-confidential versions of the defence for (i) BT/EE and (ii) the United Kingdom.

38 Acting on a proposal from the First Chamber, the Court decided, pursuant to Article 28 of the Rules of Procedure, to refer the case to a chamber sitting in extended composition.

39 By documents lodged at the Court Registry on 21 April 2017, the United Kingdom and BT/EE set out objections to the requests for confidential treatment submitted by the applicant.

40 On 26 April 2017, a meeting took place between the parties, their representatives and the Judge-Rapporteur, concerning confidentiality issues and the possibility of concentrating the pleas and arguments of the main parties to the proceedings.

41 On 10 May 2017, the applicant submitted observations on the relevance of the documents which were the subject of the request made in the application for a measure of organisation of the procedure or a measure of inquiry. On 31 May 2017, the Commission lodged at the Court Registry a request for confidential treatment and a non-confidential version of those observations for BT/EE.

42 On 16 May 2017, by way of the measures of organisation of procedure provided for in Article 89 of the Rules of Procedure, the Court asked the parties to lodge certain documents and put to them written questions, asking them to reply in writing.

43 The parties lodged their observations in reply on 2 and 16 June 2017 and, as annexes to their reply and rejoinder, on 4 July and 31 October 2017 respectively. The applicant inter alia lodged a revised version of its requests for confidential treatment vis-à-vis BT/EE. BT/EE made no objection to those requests within the prescribed period. In addition, the applicant and the United Kingdom indicated that they had reached an agreement whereby the applicant would send the confidential versions of various documents in the file to the United Kingdom. The main parties also requested that certain data not be made public.

44 On 4 July 2017, the applicant lodged its reply at the Court Registry, along with a request for confidential treatment and a non-confidential version of its reply for BT/EE, as well as a request that certain data not be made public. In response to one of the measures of organisation of the procedure of 16 May 2017, the applicant submitted, as an annex to its reply, a definitive summary of the evidence, specifying the relevance of each item of evidence.

45 On 28 August 2017, the Commission lodged at the Court Registry a request for confidential treatment and a non-confidential version of the reply for BT/EE.

46 On 31 August 2017, the United Kingdom and BT/EE submitted their respective statements in intervention.

47 On 18 September 2017, the Commission lodged a request that certain data relating to the reply not be made public.

48 By order of 26 September 2017, the President of the First Chamber of the General Court granted BT/EE, pursuant to the requests for confidential treatment vis-à-vis BT/EE lodged by the Commission, leave to receive a non-confidential version of each procedural document served on the main parties, the decision on the merits of those requests for confidential treatment being reserved.

49 On 6 October 2017, the main parties requested that certain information not be made public and made a request for confidential treatment vis-à-vis BT/EE in connection with the United Kingdom’s statement in intervention, accompanied by the corresponding non-confidential versions. BT/EE made no objection to that request for confidential treatment within the prescribed period.

50 On 20 October 2017, BT/EE confirmed that it had no objection to the requests made by the main parties for confidential treatment of the reply.

51 On 31 October 2017, the Commission lodged its rejoinder. In response to one of the measures of organisation of the procedure of 16 May 2017, it submitted, as an annex to its rejoinder, a definitive summary of the evidence, specifying the relevance of each item of evidence.

52 On 28 November 2017, the main parties jointly requested that certain data not be made public and made a joint request for confidential treatment vis-à-vis BT/EE in connection with the rejoinder, accompanied by the corresponding non-confidential versions. BT/EE made no objection to that request for confidential treatment within the prescribed period.

53 On 31 October 2017, the applicant submitted its observations on BT/EE’s and the United Kingdom’s statements in intervention. The Commission indicated that it had no observations on those statements. On 14 December 2017, the main parties lodged at the Court Registry a request for confidential treatment and a joint non-confidential version, vis-à-vis BT/EE, of the applicant’s observations on the statements in intervention of BT/EE and of the United Kingdom, and a joint request for the omission of certain information vis-à-vis the public. BT/EE made no objection to those requests within the prescribed period.

54 By document lodged at the Court Registry on 9 February 2018, the applicant requested that a hearing be held. The Commission did not express a view as to whether there should be a hearing within the period prescribed.

55 On 17 April and 25 July 2018, by way of measures of organisation of the procedure as laid down in Article 89 of the Rules of Procedure, the General Court put written questions to the parties and requested that they answer them in writing.

56 The parties lodged their observations in reply on 1, 2 and 18 May, 25 June, 13 July, and 8 and 13 August 2018. Since the applicant, BT/EE and the United Kingdom had provided, inter alia, confidentiality undertakings, signed by their representatives, the documents which were the subject of the request made in the application for a measure of organisation of the procedure or a measure of inquiry were sent to them. The applicant also submitted observations regarding those documents. The main parties then made a joint request for confidential treatment and lodged common non-confidential versions of those observations for BT/EE, the United Kingdom and the general public. BT/EE and the United Kingdom did not express any desire to submit observations regarding those documents.

57 On 23 November 2018, the Commission submitted observations regarding the applicant’s observations vis-à-vis the documents which were the subject of the request made in the application for a measure of organisation of the procedure or a measure of inquiry. The main parties then made a joint request for confidential treatment and lodged common non-confidential versions of those observations for BT/EE, the United Kingdom and the general public.

58 On 14 December 2018, the applicant lodged a letter with the Court Registry regarding the organisation of the hearing. The Commission lodged its observations on that letter on 8 February 2019.

59 By a measure of organisation of procedure of 15 February 2019, the Court requested the main parties to produce common non-confidential versions of the Report for the Hearing vis-à-vis BT/EE and the public. The main parties produced those versions on 1 March 2019.

60 On a proposal from the Judge-Rapporteur, the Court (First Chamber, Extended Composition) decided to open the oral part of the procedure on 1 March 2019.

61 By an order for a measure of inquiry of 19 March 2019, the Court requested the Commission to produce certain documents. The Commission produced those documents on 2 April 2019.

62 By a measure of organisation of procedure of 19 March 2019, the Court put written questions to the parties, asking them to reply in writing. The parties lodged their observations in response on 10 April 2019. The main parties made a joint request for confidential treatment and lodged common non-confidential versions of their observations for BT/EE and the general public.

63 On 22 March 2019, the applicant sent the Court Registry a letter requesting that the hearing be held partly in camera. The Commission, BT/EE and the United Kingdom lodged their observations on that letter on 2, 3 and 4 April 2019 respectively.

64 On 15 April 2019, the Court adopted a measure of organisation of procedure concerning the hearing.

65 On 24 April 2019, the applicant lodged a letter with the Court Registry regarding the organisation of the hearing. BT/EE submitted its observations on that letter on 30 April 2019.

66 Following the hearing on 2 and 3 May 2019, the applicant lodged at the Court Registry, on 10 May 2019, a letter containing answers to the questions put at the hearing. The main parties made a joint request for confidential treatment and lodged common non-confidential versions of that letter at the Court Registry for BT/EE and the general public.

67 The oral part of the procedure was closed on 27 June 2019.

IV. Forms of order sought

68 The applicant claims that the Court should: – annul the contested decision; – order the Commission to pay the costs, including those relating to any intervention.

69 The Commission, supported by BT/EE and the United Kingdom, contends that the Court should: – dismiss the action; – order the applicant to pay the costs.

V. Law

A. Legal background

70 In the first part of the first plea, the applicant puts forward arguments concerning the intensity of the judicial review carried out by the General Court in relation to concentrations, the legal framework applicable following the adoption of Regulation No 139/2004 and the burden of proof and the standard of proof incumbent on the Commission, where it has to prove a significant impediment to effective competition, in accordance with Article 2(3) of Regulation No 139/2004.

71 Since those arguments are relevant to the examination of all the pleas and arguments put forward by the parties, it is necessary to examine the first part of the first plea in law before examining the applicant’s other pleas and arguments. Furthermore, the Court considers that it is also appropriate to recall a number of principles concerning the obligation to state reasons.

1. The intensity of the judicial review in relation to concentrations

72 As a preliminary point, it must be borne in mind that the purpose of attaching the General Court to the Court of Justice and of introducing two levels of jurisdiction was, first, to improve the judicial protection of individual interests, in particular in proceedings necessitating close examination of complex facts, and, second, to maintain the quality and effectiveness of judicial review in the EU legal order, by enabling the Court of Justice to concentrate on its essential task, namely to ensure that in the interpretation and application of EU law the law is observed (see, to that effect, judgment of 17 December 1998, Baustahlgewebe v Commission, C‑185/95 P, EU:C:1998:608, paragraph 41).

73 In the structure of the judicial system of the European Union, where the General Court is responsible for establishing the facts and undertaking a substantive examination of the dispute, the scope of judicial review provided for in Article 263 TFEU extends to all the elements of Commission decisions taken on the basis of Regulation No 139/2004 which are subject to in-depth review by the General Court, in law and in fact, in the light of the pleas raised by applicants and taking into account all the evidence submitted by the latter.

74 The action for annulment provides a particularly appropriate procedural framework for the thorough examination, both parties being duly heard, of legal and factual questions, particularly in complex fields such as competition law, as is apparent from the third recital of Council Decision 88/591/ECSC, EEC, Euratom of 24 October 1988 establishing a Court of First Instance of the European Communities (OJ 1988 L 319, p. 1) (see, by analogy, judgment of 25 July 2018, Georgsmarienhütte and Others, C‑135/16, EU:C:2018:582, paragraph 19).

75 Since the contested decision was adopted on the basis, in particular, of Article 8 of Regulation No 139/2004 and since it is a measure applying Article 2 of that regulation to a concentration, the General Court must, in its review of the legality of that decision, confine itself to analysing the position adopted by the Commission in relation to the transaction as notified, that is to say, it must examine, in the light of the pleas and arguments put forward by the applicant, the way in which the law has been applied to the facts and adjudicate on the merits of the Commission’s findings concerning the effects of the concentration on competition (see, to that effect, judgment of 6 June 2002, Airtours v Commission, T‑342/99, EU:T:2002:146, paragraph 53).

76 As the Court of Justice has repeatedly held, even in the case where complex assessments have been made by the Commission, the EU judicature must not only establish whether the evidence relied on is factually accurate, reliable and consistent but also ascertain whether that evidence contains all the information which must be taken into account in order to assess a complex situation and whether it is capable of supporting the conclusions drawn from it (judgment of 15 February 2005, Commission v Tetra Laval, C‑12/03 P, EU:C:2005:87, paragraph 39; see also judgment of 26 March 2019, Commission v Italy, C‑621/16 P, EU:C:2019:251, paragraph 104 and the case-law cited).

2. The scope of the change made by Regulation No 139/2004

77 The applicant maintains that the Commission erred in law by establishing in the contested decision such a low intervention threshold that the requirement of a significant impediment to effective competition was rendered meaningless. The application of the legal criterion adopted by the Commission in the present case, based on its own Guidelines on the assessment of horizontal mergers under the Council Regulation on the control of concentrations between undertakings (OJ 2004 C 31, p. 5; ‘the Guidelines’), would enable it to prevent any horizontal concentration in an oligopolistic market.

78 In its application, the applicant requested the Court to clarify the applicable criteria for establishing the existence of a ‘significant impediment to effective competition’ where there is no dominant position or coordination between the parties on an oligopolistic market.

79 According to the applicant, the change in the wording of Article 2(3) of Regulation No 139/2004, the purpose of which was to include situations where there are non-coordinated effects in oligopolistic markets, did not lower the threshold for Commission intervention in concentrations.

80 The Commission argues that, while recital 25 of Regulation No 139/2004 does not make it possible to establish any presumption of a significant impediment to effective competition based on the oligopolistic structure of a market, it does however indicate that, while no conclusion can be drawn and none has been drawn in the present case from the mere oligopolistic structure of the market, oligopolies deserve particular scrutiny.

81 The Court notes, in that regard, that Council Regulation (EEC) No 4064/89 of 21 December 1989 on the control of concentrations between undertakings (OJ 1989 L 395, p. 1), now replaced by Regulation No 139/2004, established the principle that a concentration with a Community dimension which creates or strengthens a dominant position as a result of which effective competition in the common market or in a substantial part of it would be significantly impeded is to be declared incompatible with the internal market; this is confirmed by recital 24 of Regulation No 139/2004.

82 Recital 26 of Regulation No 139/2004 states that significant impediments to effective competition are generally the result of the creation or strengthening of a dominant position, and provides that ‘with a view to preserving the guidance that may be drawn from past judgments of the European [C]ourts and Commission decisions pursuant to Regulation … No 4064/89, while at the same time maintaining consistency with the standards of competitive harm which have been applied by the Commission and the Community [C]ourts regarding the compatibility of a concentration with the common market, this Regulation should accordingly establish the principle that a concentration with a Community dimension which would significantly impede effective competition, in the common market or in a substantial part thereof, in particular as a result of the creation or strengthening of a dominant position, is to be declared incompatible with the common market’.

83 In addition, Article 2(3) of Regulation No 139/2004, which replaced Article 2(3) of Regulation No 4064/89, now provides that a concentration which would significantly impede effective competition, in the internal market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position, is to be declared incompatible with the internal market.

84 It follows that proof of the creation or strengthening of a dominant position within the meaning of Regulation No 139/2004 may in certain cases constitute proof of a significant impediment to effective competition. That observation does not however in any way mean that the second criterion is the same in law as the first, but only that it may follow from one and the same factual analysis of a specific market that both criteria are satisfied (see, to that effect, judgment of 21 September 2005, EDP v Commission, T‑87/05, EU:T:2005:333, paragraph 49).

85 The Courts of the European Union have not, to date, expressly interpreted Regulation No 4064/89 or Regulation No 139/2004 as regards the compatibility with the internal market of concentrations giving rise to non-coordinated effects on an oligopolistic market.

86 It is apparent from the preparatory work for, and the wording of Article 2(3) of, Regulation No 139/2004 (see, in particular, the words ‘in particular’) that that provision was adopted in order to achieve the following three objectives.

87 In the first place, it was a question of extending the scope of substantive review by enabling the Commission to catch, in the specific context of oligopolistic markets, transactions significantly impeding effective competition even if they do not enable the undertakings concerned to create or strengthen an individual or collective dominant position.

88 In the second place, Article 2(3) of Regulation No 139/2004 was intended to maintain and even strengthen the concept of a dominant position by recognising the role played by that concept in the system established within the European Union by competition law, as interpreted by the Courts of the European Union, which is to enable the authorities to intervene, in a context marked by the freedom to conduct a business, when faced with transactions which, if implemented, would enable one or more operators to determine the competitive conditions and to eliminate competition in whole or in part on the relevant market without fear of the reaction of competitors and consumers.

89 In the third place, that provision was intended to increase legal certainty and render the Commission’s analysis of concentrations more transparent and more foreseeable.

90 In order to take those factors into account, Article 2(3) of Regulation No 139/2004 must be interpreted as allowing the Commission to prohibit, in certain circumstances, on oligopolistic markets concentrations which, although not giving rise to the creation or strengthening of an individual or collective dominant position, are liable to affect the competitive conditions on the market to an extent equivalent to that attributable to such positions, by conferring on the merged entity the power to enable it to determine, by itself, the parameters of competition and, in particular, to become a price maker instead of remaining a price taker.

91 However, since the conditions and limits of such an extension of the scope of Regulation No 139/2004 have not been specified by the EU legislature, that regulation must be interpreted in the light of its objectives.

92 Article 3(3) TEU states that the European Union is to establish an internal market, which — in accordance with Protocol (No 27) on the internal market and competition, annexed to the Treaty of Lisbon (OJ 2010 C 83, p. 309), which, under Article 51 TEU, has the same legal value as the Treaties — includes a system ensuring that competition is not distorted.

93 Thus, Regulation No 139/2004 is, like Articles 101 and 102 TFEU, among the competition rules referred to in Article 3(1)(b) TFEU which are necessary for the functioning of that internal market. The function of those rules is precisely to prevent competition from being distorted to the detriment of the public interest, individual undertakings and consumers, thereby ensuring the well-being of the European Union (see, by analogy, judgments of 17 February 2011, TeliaSonera Sverige, C‑52/09, EU:C:2011:83, paragraphs 20 to 22, and of 12 December 2018, Servier and Others v Commission, T‑691/14, under appeal, EU:T:2018:922, paragraph 238).

94 In particular, according to now well-established case-law, Regulation No 139/2004 seeks to ensure that the process of reorganisation of undertakings does not result in lasting damage to competition. According to recitals 5, 6 and 8 of Regulation No 139/2004, EU law must include provisions governing those concentrations that may significantly impede effective competition in the internal market or in a substantial part of it and permitting effective control of all those concentrations in terms of their effect on the structure of competition in the European Union (judgments of 7 September 2017, Austria Asphalt, C‑248/16, EU:C:2017:643, paragraph 21, and of 31 May 2018, Ernst & Young, C‑633/16, EU:C:2018:371, paragraph 41).

95 More specifically, it should be noted that recital 25 of Regulation No 139/2004 states that, ‘under certain circumstances, concentrations involving the elimination of important competitive constraints that the merging parties had exerted upon each other, as well as a reduction of competitive pressure on the remaining competitors, may, even in the absence of a likelihood of coordination between the members of the oligopoly, result in a significant impediment to effective competition’.

96 Thus, Article 2(3) of Regulation No 139/2004 must be interpreted in the light of recital 25 thereof, which lays down two cumulative conditions in order that non-coordinated effects arising from a concentration may, under certain circumstances, result in a significant impediment to effective competition: the concentration must 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’.

97 It follows that 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.

98 It is in particular in the light of those considerations that the Commission relied, in the contested decision, on the concepts of ‘non-coordinated effects’, ‘closeness of competition’, ‘reduction of competitive pressure on the remaining competitors’ and ‘important competitive force’, which do not appear in Article 2(3) of Regulation No 139/2004, but only in recital 25 thereof and in the Guidelines.

99 In that regard, it has been held that the Commission is bound by guidelines and notices which it adopts in the area of control of concentrations, provided that they do not depart from the rules of the Treaty and of Regulation No 139/2004 (see judgment of 7 June 2013, Spar Österreichische Warenhandels v Commission, T‑405/08, not published, EU:T:2013:306, paragraph 58 and the case-law cited).

100 Moreover, although the practice followed by the Commission in its previous decisions or the content of the Guidelines may constitute a useful point of reference and clearly be of interest in the present case, they cannot, on their own, guide the General Court’s analysis. The Commission’s Guidelines, as well as its previous practice, cannot, in any event, bind the EU Courts which have exclusive jurisdiction to interpret EU law, under Article 19 TEU, since in particular those guidelines merely describe the way in which the Commission, as an administrative authority, interprets the relevant legislation and, acting as the European Union competition authority, applies, in particular from an economic point of view, Regulation No 139/2004 (see, to that effect, judgments of 7 March 2002, Italy v Commission, C‑310/99, EU:C:2002:143, paragraph 52; of 1 October 2015, Electrabel and Dunamenti Erőmű v Commission, C‑357/14 P, EU:C:2015:642, paragraph 68; and of 13 December 2017, Crédit mutuel Arkéa v ECB, T‑712/15, EU:T:2017:900, paragraph 75).

101 Those considerations do not, however, mean that the General Court may not, in carrying out its task of interpreting EU law, adopt the guidance and the economic or legal assessments contained in the Commission’s practice in previous decisions or in its Guidelines.

102 As the Commission observes, in paragraph 24 of the Guidelines, on non-coordinated effects, a concentration may significantly impede effective competition in a market by removing significant competitive pressure on one or more sellers whose market power is therefore increased. The most direct effect of the merger is the loss of competition between the merging firms. For example, if prior to the merger one of the merging firms had raised its price, it would have lost some sales to the other merging firm. The merger removes this particular constraint.

103 Non-merging firms in the same market might also benefit from the reduction of competitive pressure that would result from the merger, since the merging firms’ price increase might switch some demand to the rival firms, which, in turn, might find it profitable to increase their prices. The reduction in these competitive constraints could lead to significant price increases in the relevant market.

104 As the Commission observes in paragraph 28 of the Guidelines, which relates to the case where the merging parties are ‘close competitors’, the fact that rivalry between the merging parties has been an important source of competition on the market is a key factor in that analysis.

105 It is in the light of that interpretation of Article 2(3) of Regulation No 139/2004 that it is necessary to examine in turn the applicant’s first, third and fourth pleas relating to the three theories of harm developed by the Commission in the contested decision.

3. The burden of proof and standard of proof in relation to concentrations

106 For the purposes of the hearing and at the hearing, the parties were requested to express their views on the allocation of the burden of proof and on the standard of proof before the General Court in relation to concentrations and in the present case.

107 The Court recalls that, to declare a concentration incompatible with the internal market, the Commission has to prove, in accordance with Article 2(3) of Regulation 139/2004, that the implementation of the notified concentration would significantly impede effective competition in the internal market or in a substantial part of it, in particular as a result of the creation or strengthening of a dominant position (judgment of 6 July 2010, Ryanair v Commission, T‑342/07, EU:T:2010:280, paragraph 26).

108 In merger control procedures, it should be recalled that the necessary prospective analysis consists of an examination of how a concentration might alter the factors determining the state and structure of competition on the markets affected. Such an analysis makes it necessary to envisage various chains of cause and effect with a view to ascertaining which of them are the most likely (see, to that effect, judgment of 16 January 2019, Commission v United Parcel Service, C‑265/17 P, EU:C:2019:23, paragraph 32).

109 As the applicant correctly observed, the standard of proof applicable in order to establish that there are non-coordinated effects on an oligopolistic market is not substantially different from that applicable in order to establish coordinated effects. If that were not the case, the Commission might classify the facts in such a way as to benefit from the most favourable rules of evidence before the General Court.

110 It must be borne in mind that the inherent complexity of one or more theories of harm advanced in support of one or more significant impediments to effective competition put forward in relation to a concentration is a factor which must be taken into account when assessing the plausibility of the various consequences such a concentration may have, in order to identify those which are most likely to arise, but such complexity does not, of itself, have an impact on the standard of proof which is required (see, to that effect, judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 51).

111 However, the more prospective the analysis is and the chains of cause and effect dimly discernible, uncertain and difficult to establish, the more the quality of the evidence produced by the Commission in order to establish that it is necessary to adopt a decision declaring the concentration incompatible with the internal market is important (see, to that effect, judgment of 15 February 2005, Commission v Tetra Laval, C‑12/03 P, EU:C:2005:87, paragraph 44). In other words, the more a theory of harm advanced in support of a significant impediment to effective competition put forward with regard to a concentration is complex or uncertain, or stems from a cause-and-effect relationship which is difficult to establish, the more demanding the Courts of the European Union must be as regards the specific examination of the evidence submitted by the Commission in this respect.

112 It has also been held that the prospective analysis necessary in merger control must be carried out with great care since it does not entail the examination of past events — for which often many items of evidence are available which make it possible to understand the causes — or of current events, but rather a prediction of events which are more or less likely to occur in future if a decision prohibiting the planned concentration or laying down the conditions for it is not adopted (see, to that effect, judgment of 15 February 2005, Commission v Tetra Laval, C‑12/03 P, EU:C:2005:87, paragraph 42).

113 That analysis requires, as a first step, an evaluation of the future conduct which the Commission contends will be engaged in by the merged entity and the other operators following the merger (see, to that effect, judgment of 14 December 2005, General Electric v Commission, T‑210/01, EU:T:2005:456, paragraph 464), by means of the assessment of the economic outcome attributable to the concentration which is most likely to ensue (see, to that effect, judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 51).

114 Furthermore, the Court observes that it is settled case-law that the Commission may declare a concentration incompatible with the internal market only if the significant impediment to effective competition is the direct and immediate effect of the concentration. Such an impediment, which would stem from future decisions by the merged entity, may be regarded as a direct and immediate effect of the concentration, if that future conduct is made possible and economically rational by the alteration of the characteristics and the structure of the market caused by the concentration (see judgment of 11 December 2013, Cisco Systems and Messagenet v Commission, T‑79/12, EU:T:2013:635, paragraph 118 and the case-law cited).

115 That evaluation is supplemented, as a second step, by an assessment, by means of a prospective analysis of the reference market, of whether that future conduct will probably lead to a situation in which effective competition in the relevant market is significantly impeded (see, to that effect, judgment of 6 June 2002, Airtours v Commission, T‑342/99, EU:T:2002:146, paragraph 59).

116 It is therefore in the light of the economic outcome attributable to the concentration which is the most likely to ensue that the Commission must, as a following step, show that that concentration would probably and significantly impede effective competition in the relevant market (see, to that effect, judgment of 14 December 2005, General Electric v Commission, T‑210/01, EU:T:2005:456, paragraph 364).

117 Since the second stage of the analysis which must be carried out by the Commission is the result of an assessment based on hypotheses, it cannot be required that proof be adduced that the scenarios and theories of harm underpinning that assessment will inevitably occur. However, those scenarios and theories of harm must appear sufficiently realistic and plausible, and cannot therefore solely be conceivable from a theoretical point of view, in the light of an analysis of all the relevant factors.

118 In the context of an analysis of a significant impediment to effective competition the existence of which is inferred from a body of evidence and indicia, and which is based on several theories of harm, the Commission is required to produce sufficient evidence to demonstrate with a strong probability the existence of significant impediments following the concentration. Thus, the standard of proof applicable in the present case is therefore stricter than that under which a significant impediment to effective competition is ‘more likely than not’, on the basis of a ‘balance of probabilities’, as the Commission maintains. By contrast, it is less strict than a standard of proof based on ‘being beyond all reasonable doubt’ (see, to that effect, Opinion of Advocate General Tizzano in Commission v Tetra Laval, C‑12/03 P, EU:C:2004:318, points 72 to 77, and of Advocate General Jääskinen in France v Commission, C‑559/12 P, EU:C:2013:766, points 34 and 35; see, a contrario, Opinion of Advocate General Kokott in Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2007:790, points 209 to 211).

119 It is in the light of those considerations that the arguments put forward by the applicant in support of the action, and in particular the three theories of harm developed by the Commission, must be examined.

4. Statement of reasons

120 The Court notes that the Commission is not obliged, in the statement of reasons for decisions adopted under Regulation No 139/2004, to take a position on all the information and arguments relied on before it, including those which are plainly of secondary importance to the appraisal it is required to undertake; this approach enables it to distinguish the core issues from the inessential ones.

121 It is however required to set out clearly and succinctly the decisive facts and legal and economic considerations, and the pleas in law and evidence having decisive importance in the context of a merger decision. The reasoning must in addition be logical and must not disclose any internal contradictions (see, to that effect, judgment of 10 July 2008, Bertelsmann and Sony Corporation of America v Impala, C‑413/06 P, EU:C:2008:392, paragraph 169).

122 Moreover, according also to settled case-law, the obligation of the General Court to state reasons, pursuant to the first sentence of Article 36 and the first paragraph of Article 53 of the Statute of the Court of Justice of the European Union, does not require the General Court to provide an account that follows exhaustively and point by point all the pleas and arguments articulated by the parties to the case (see judgment of 21 July 2011, Evropaïki Dynamiki v EMSA, C‑252/10 P, not published, EU:C:2011:512, paragraph 46 and the case-law cited).

123 In the interests of procedural economy and in accordance with the principle of the proper administration of justice, the Courts of the Union may give judgment in an action without necessarily having to rule on all the pleas in law and arguments put forward by the parties.

B. Summary of the pleas in law and structure of the action

124 In its action, the applicant puts forward five pleas in law, disputing the three theories of harm developed in the contested decision and the conclusions drawn by the Commission regarding the commitments which it gave in order to resolve the issues raised by that institution.

125 The first and fourth pleas in law relate to the Commission’s first and third theories of harm, which concern the elimination of competition between Three and O2 in the retail market (the first plea) and in the wholesale market (the fourth plea) respectively. The second plea relates to the Commission’s assessment of the counterfactual scenario, on which it based its evaluation of the retail and wholesale markets. The third plea relates to the Commission’s second theory of harm, which concerns the retail market, in relation to network sharing, and the applicant’s commitments in relation to network sharing. The fifth plea relates to the other commitments offered by the applicant.

126 The relationship between the structure of the contested decision and that of the application is illustrated in the table below, submitted by the applicant.

127 It is therefore appropriate, first of all, to examine in turn the applicant’s first, third and fourth pleas, relating to the three theories of harm developed by the Commission, and then to examine the second and fifth pleas.

C. The first theory of harm, relating to the existence of non-coordinated effects on the retail market

1. Summary of the Decision

128 In the first theory of harm, the Commission relies on the important competitive constraint exerted by Three and O2, the fact that they competed closely, their market shares and the incentives for the merged entity to increase prices, and on the ability of its competitors to compete in order to conclude, in recital 1226 of the contested decision, that the concentration ‘is likely to give rise to non-coordinated anticompetitive effects on the retail market’.

129 In particular, the Commission noted that Three and O2 were the only mobile network operators in the United Kingdom whose market shares had been constantly growing over recent years (recitals 330 to 406 of the contested decision) and that they competed closely, both against one another and against the other mobile network operators (recitals 407 to 463 of the contested decision).

130 In recitals 468 to 681 of the contested decision, the Commission took the view that Three constituted, prior to the merger, an ‘important competitive force’ within the meaning of paragraph 37 of the Guidelines or, in any event, exerted an important competitive constraint. According to the Commission, it was the most aggressive and innovative player, offering the most competitive prices in the direct channel and having offered 4G at no extra cost, which had forced its competitors to abandon strategies to sell 4G at a premium.

131 In recitals 682 to 776 of the contested decision, the Commission submitted that, in the absence of the transaction, Three would probably continue to exert an important competitive constraint, since it was financially sound and was unlikely to experience capacity constraints, as it explained further in Annex C to the contested decision, which is an integral part of that decision.

132 Similarly, the Commission took the view that, pre-transaction, O2 exerted an important competitive constraint and was likely to continue to do so in the absence of the transaction (recitals 778 to 872 of the contested decision).

133 The transaction would eliminate the competitive constraints that Three and O2 exerted on one another and on the other mobile network operators, and this would result in significantly weakened competition in the retail market. In particular, it appeared likely that the merged entity would increase prices (recitals 873 to 906 of the contested decision).

134 The Commission drew the same conclusions from its quantitative analysis of the likely effects on prices as a result of the elimination of competition in the retail market (recitals 1191 to 1225 of the contested decision), of which it gave details in Annex A to the contested decision, which forms an integral part of that decision.

135 The Commission found that the transaction was likely to have a negative impact on the ability of the remaining mobile network operators to compete. It would disrupt the existing network-sharing arrangements, which currently worked well. The Commission also found it likely that, given BT/EE’s and Vodafone’s history and current strategy and positioning, those two operators were likely to follow price increases applied by the merged entity (recitals 907 to 960 of the contested decision).

136 In so far as concerns non-MNOs, their ability to compete and to innovate would be limited (recitals 961 to 1148 of the contested decision).

2. Summary of the first plea in law and of the main items of evidence adduced in support of the first theory of harm

137 By its first plea in law, the applicant submits that, in the contested decision, the Commission made errors in law and manifest errors of assessment and also infringed essential procedural requirements, first, in its interpretation and application to Three of the criterion of ‘important competitive force’ (second part), second, as regards the closeness of competition (third part) and, third, regarding the assessment of market shares (fourth part).

138 In addition, it alleges that the Commission erred in law and made manifest errors of assessment and also distorted the evidence in its assessment of the quantitative pricing effects of the concentration (the fifth part) and the incentives of the merged entity post-merger (the sixth part). Lastly, the applicant alleges that the Commission did not conduct an overall examination of these various factors (the seventh part).

139 At the hearing, the Commission specified that the first theory of harm was essentially based on the following three items of evidence: the fact that Three constitutes an important competitive force, the closeness of competition between Three and O2, and the quantitative analysis of the effects of the concentration on prices.

140 The Court therefore considers it appropriate to begin by examining the fourth part, concerning the analysis of market shares, and the second part, concerning the classification of Three as an important competitive force, which overlap in part, and then the third part, relating to the assessment of the closeness of competition, and the fifth part, relating to the quantitative pricing effects of the concentration. Subsequently, if necessary, it will be necessary to examine the sixth and seventh parts of this plea.

(a) The market share analysis

141 In the fourth part of the first plea, the applicant submits that the Commission made a manifest error of assessment and an error of law in finding (i) that the merged entity would, following the merger, have the largest market share and (ii) that that situation must be regarded as an indicator of the loss of an important competitive constraint.

142 The applicant argues, first of all, that the market share of the new entity would have been well below 50%, second, that the Commission failed to have regard, in its assessment of market shares, to other factors, such as the power of the competitors of Three and O2 and, third, that it failed to take into account the effects of the divestment of O2’s shareholding in Tesco Mobile, which the applicant proposed as part of the commitments it offered the Commission.

143 The Commission contests those arguments.

144 It should be recalled, as a preliminary point, that, according to settled case-law, a proper definition of the relevant market is a necessary precondition for any assessment of the effect of a concentration on competition (judgments of 31 March 1998, France and Others v Commission, C‑68/94 and C‑30/95, EU:C:1998:148, paragraph 143, and of 7 June 2013, Spar Österreichische Warenhandels v Commission, T‑405/08, not published, EU:T:2013:306, paragraph 116).

145 The definition of the relevant markets constitutes an essential stage in the control of concentrations, since it makes it possible, first, to identify the boundaries of competition between firms and then to assess their market power.

146 The definition of the market in the products affected by the merger must take account of the overall economic context so as to make it possible to assess the actual economic power of the undertaking or undertakings in question and, for that purpose, it is necessary first to define the products which, although incapable of being substituted for other products, are sufficiently interchangeable with the undertaking’s own products, both as regards their objective characteristics and the competitive conditions and the structure of supply and demand on the market (judgment of 6 June 2002, Airtours v Commission, T‑342/99, EU:T:2002:146, paragraph 20).

147 In so far as significant impediments to effective competition arise generally from the creation or strengthening of a dominant position, market shares may only be used as indicia of competition concerns to the extent that the market to which those shares relate has been correctly defined beforehand. The same is true of the Herfindahl-Hirschmann Index (used to measure the degree of concentration in a market; ‘the HHI’), to which the Commission refers in recitals 398 to 405 of the contested decision.

148 In the present case, the Court finds that the applicant does not dispute that the concentration would result in a strengthening of an oligopolistic market on a market which is already highly concentrated. It is a market on which four operators, or three if the concentration were implemented, share 90% of the market. The concentration would have enabled the merged entity, consisting of Three and O2, to account for [between 30 and 40%] of the retail market and thus become the main operator, ahead of BT/EE and Vodafone, whose market shares are [between 30 and 40%] and [between 20% and 30%] respectively.

149 Although such an analysis, based on more or less similar market shares, creating symmetrical effects conducive to tacit collusion, supports the conclusion that the concentration would be strengthened on an oligopolistic market, it cannot, however, lead to the conclusion that such a concentration would cause lasting harm to competition which would, as such, be liable to constitute a significant impediment to effective competition in the context of a theory of harm based on non-coordinated effects.

150 Such reasoning would amount in practice to allowing the Commission to prohibit any horizontal concentration in an oligopolistic market, since, based on an application of recital 25 of Regulation No 139/2004, the criteria for eliminating the important competitive constraints exerted by the merging parties (i) upon each other and (ii) on the remaining competitors, would, by definition, be fulfilled.

151 That is why the Commission rightly states that the market shares examined in recitals 330 to 406 of the contested decision provided only a ‘first indication’ of the competitive importance of the parties to the concentration (see recitals 330 and 406 and footnote 271 of the contested decision). In recital 406 of the contested decision, the Commission states that ‘the size and evolution of the market shares of the parties in the relevant market and segments thereof provide a first indication of the important competitive constraint exerted by Three and O2’.

152 Contrary to what is argued by the applicant, the Commission did not therefore consider the fact that the merged entity would have the largest market share as an indicator of the loss of an important competitive constraint, but took the view that the size and evolution of the market shares of Three and O2 were a first indication of the important competitive constraint exerted by them, which would be eliminated by the concentration.

153 Moreover, the market share analysis does not demonstrate anything other than the fact that the transaction would further concentrate a tight mobile communication oligopoly in the United Kingdom, without however giving rise to anticompetitive effects similar to those which might result from the creation or strengthening of an individual or collective dominant position.

154 The fourth part of the first plea must therefore be rejected.

(b) Classification of Three as an ‘important competitive force’

155 According to the contested decision, one of the factors which the Commission took into account in concluding that the concentration would give rise to non-coordinated effects was that ‘Three constitute[d] an important competitive force in the [retail market] … pursuant to paragraph 37 of the … Guidelines, or in any event it exert[ed] an important competitive constraint on that market, and [was] likely to continue exerting such a constraint absent the transaction’ (recital 777 of the contested decision).

156 By the second part of the first plea, alleging errors with respect to the classification of Three as an important competitive force, the applicant puts forward three complaints, relating, first, to the distortion of the concept of important competitive force, second, to the degree of competitive constraint exerted by Three in the retail market and, third, to the distortion of the concept of important competitive constraint. Each of those errors is sufficient, according to the applicant, to result in the annulment of the contested decision.

(1) Distortion of the concept of ‘important competitive force’

157 According to the applicant, the Commission erred in law in taking the view that it was sufficient, to support the conclusion that it was an important competitive force, that an undertaking ‘contribute[d] substantially and consistently to the competitive process’, since such an interpretation of the concept of ‘important competitive force’ fails to differentiate between the contribution to the competitive process made by every competitor in an oligopolistic market and the particular role played by an important competitive force, within the meaning of paragraphs 37 and 38 of the Guidelines.

158 The Commission’s assertion, in recital 326 of the contested decision and in its defence, that an important competitive force need not necessarily stand out from its competitors in terms of its impact on competition constitutes an error in law. Indeed, such a position would allow it to treat as an important competitive force any undertaking in an oligopolistic market, which would amount to a de facto prohibition on horizontal mergers in oligopolistic markets and would be a breach of the principle of legal certainty.

159 The Commission’s approach to the concept of ‘important competitive force’ is also incompatible with the approach to the concept taken by the competition authorities in the United Kingdom and the United States, as well as with the way in which that concept has been developed in the preparatory work for Regulation No 139/2004, the Commission’s own precedents, and the Guidelines.

160 The Commission replies that it is clear from paragraph 37 of the Guidelines that, contrary to what the applicant claims, it is not necessary for an undertaking to stand out from its competitors in terms of its impact on competition in order for it to constitute an important competitive force. It must simply have more of an influence on the competitive process than its market share would suggest.

161 The applicant’s assertion that the Commission fails to differentiate between the contribution to the competitive process made by every competitor in an oligopolistic market and the particular role played by an important competitive force is clearly unfounded, given that it did not classify O2 as an important competitive force, as is apparent from recital 872 of the contested decision. Furthermore, a member of an oligopoly could, because of its rather defensive approach, have a limited influence on competition.

162 Lastly, the applicant’s assertion that the Commission’s approach is incompatible with the approach taken by the United Kingdom and United States competition authorities is irrelevant and unfounded. The Guidelines are intentionally different from their American equivalent. Furthermore, the Competition and Markets Authority of the United Kingdom supported the Commission’s findings as to the competitive constraint exerted by Three, as is apparent from recital 483 of the contested decision.

163 The Court finds, as was observed in paragraphs 100 and 101 above, that although the Commission’s Guidelines, as well as its previous decision-making practice, cannot bind the EU Courts, the General Court may, where appropriate, adopt the guidance and the economic or legal assessments contained in the Commission’s practice in previous decisions or in those guidelines.

164 Moreover, the Court observes that, in a number of cases (see Cases COMP/M.6203 — Western Digital Ireland/Viviti Technologies (2011), COMP/M.6497 — Hutchison 3G Austria/Orange Austria (2012), COMP/M.7018 — Telefónica Deutschland/E-Plus (2014) (‘the German case’), COMP/M.6992 — Hutchison 3G UK/Telefonica Ireland (2014) (‘the Irish case’), COMP/M.7421 — Orange/Jazztel (2015), COMP/M.7637 — Liberty Global/BASE Belgium (2016), COMP/M.7758 — Hutchinson 3G Italy/Wind/JV (2016)), the Commission classified one or both of the merging parties as ‘important competitive force(s)’, whose elimination as a result of the concentration, in combination with other factors (barriers to entry, degree of concentration of the market, prices rises, closeness of the competition between the merging parties, etc.), would be liable to result in a significant impediment to effective competition, whilst authorising, subject to conditions, the concentration.

165 As regards the applicant’s argument that the Commission’s approach to the concept of ‘important competitive force’ is incompatible with its own precedents, it should be pointed out that the position adopted by the Commission in the contested decision is consistent with that set out in the German case (recitals 120 to 122; see paragraph 164 above), Case COMP/M.7421 — Orange/Jazztel (2015) (recital 245) and Case COMP/M.6497 — Hutchison 3G Austria/Orange Austria (2012) (recitals 265 and 283).

166 Moreover, the Commission examined, inter alia, in Case COMP/M.5650 — T-Mobile/Orange (2010), the question whether one or other of the parties to that concentration could be regarded as a ‘particularly important competitor’ in the United Kingdom mobile telecommunications market exerting a ‘particularly important restraint’ on the other participants in that market. In that decision, the Commission found, on the basis of an analysis of the gross add shares, that 3UK could be regarded as a ‘maverick in the market’ since it ‘captured’ more customers from Orange and T-Mobile than its market share would suggest. Furthermore, the Commission considered in that decision that 3UK was a market leader in pricing and service innovations.

167 In paragraph 380 of the Statement of Objections, the Commission stated that, for an undertaking to be an important competitive force, it was not necessary for it to be a ‘maverick’ on the market. More specifically, the Commission took the view that such an undertaking has to contribute, substantially and consistently, to the competitive process on the market based on parameters such as price, quality, choice and innovation. A merger involving a company which has recently entered the market, and which may be presumed to exert significant competitive pressure on the market is, according to the Commission, only one example of a situation where significant non-coordinated anticompetitive effects may arise.

168 The Court observes that, as is apparent from recital 318 of the contested decision, the applicant had already argued during the administrative procedure that, in order for an undertaking to be classified as an ‘important competitive force’, it must stand out from its competitors in terms of its impact on competition, in that it plays a unique role in the market enabling it to exert disproportionately strong constraints on the other players compared to its market share that is indispensable for the preservation of effective competition.

169 In recital 326 of the contested decision, the Commission responded to that argument by finding that an ‘important competitive force’ does not need to stand out from its competitors in terms of impact on competition. According to the Commission, the fact that, in previous decisions, it found that certain undertakings had been unique in their ‘aggression’ in the market and had grown their presence on that market faster than any other competitor, as important competitive forces, does not mean that there is only one definition of the concept of ‘important competitive force’.

170 However, in its defence, the Commission conceded that an ‘important competitive force’ must have more of an influence on competition than its market share would suggest, compete in a particularly aggressive way and force other players to follow that conduct.

171 It is apparent from the contested decision that, as regards the elimination of an ‘important competitive force’, the Commission is of the opinion that the mere decline in the competitive pressure which would result, in particular, from the loss of an undertaking having more of an influence on competition than its market share would suggest is sufficient, in itself, to prove a significant impediment to effective competition.

172 Such an interpretation of the concept of ‘important competitive force’, developed in the contested decision, would introduce, if it were to be regarded as an autonomous legal criterion, a concept additional and alternative to the concept of ‘important competitive constraint’ set out in recital 25 of Regulation No 139/2004. That would lower the standard of proof required to prove a significant impediment to effective competition, according to whether the Commission classifies the foreseeable effects of a concentration as ‘non-coordinated effects’ or as ‘coordinated effects’.

173 The approach taken by the Commission in the contested decision amounts in practice to confusing three concepts, namely the concept of a ‘significant impediment to effective competition’, which is the legal criterion referred to in Article 2(3) of Regulation No 139/2004, the concept of ‘elimination of [an] important competitive [constraint]’, referred to in recital 25 of that regulation, and the concept of elimination of an ‘important competitive force’, used in the contested decision and based on the Guidelines. By confusing those concepts, the Commission considerably broadens the scope of Article 2(3) of Regulation No 139/2004, since any elimination of an important competitive force would amount to the elimination of an important competitive constraint which, in turn, would justify a finding of a significant impediment to effective competition.

174 It follows that the Commission made an error of law and an error of assessment, in recital 326 of the contested decision, in finding that an ‘important competitive force’ does not need to stand out from its competitors in terms of impact on competition, particularly in so far as such a position would allow it to treat as an ‘important competitive force’ any undertaking in an oligopolistic market exerting competitive pressure.

175 As the applicant has rightly pointed out, that would amount to allowing the Commission to prohibit, by that fact alone, horizontal concentrations in such markets and would infringe the principle of legal certainty, since the Commission could thus omit to analyse the possible elimination of the important competitive constraints that the merging parties exert upon each other in favour of a theory of harm based solely on a reduction of competitive pressure on the remaining competitors.

176 The complaint relating to distortion of the concept of ‘important competitive force’ is therefore well founded.

(2) The degree of competitive constraint exerted by Three in the retail market

177 The Commission’s conclusion in the contested decision that Three was an ‘important competitive force’, or that it in any event exerted an important competitive constraint on that market, was based on the following factors: first, gross subscriber additions that are disproportionately high in relation to Three’s market share (recital 481 of the contested decision), second, the development of its market share and customer base (recitals 475 to 480), third, its pricing policies (recitals 578 to 633), fourth, its contributions to innovation and competition (recitals 485 to 577) and, fifth, the quality of its network, its customer service and the loyalty of its customers (recitals 653 to 680).

178 According to the applicant, the Commission’s evaluation of the first four factors is vitiated by manifest errors of assessment.

(i) Gross subscriber additions

179 In order to conclude that Three is an ‘important competitive force’, or in any event exerts an important competitive constraint on the retail market, the Commission relied, inter alia, on the fact that its gross subscriber additions were disproportionately high in comparison with its market share (recitals 481 to 484 of the contested decision).

180 According to the applicant, the Commission made a manifest error of assessment by concluding, in recital 397 of the contested decision, that Three’s gross add shares (that is to say, the share of new customers won) was ‘a first indication that Three exert[ed] on the retail market a greater competitive constraint than its market share would suggest’, whereas Three’s gross add share of [between 10 and 20%] (depending on whether Three’s or the Commission’s calculations are used) is (i) very low in absolute terms and (ii) at a similar level to, or even below its subscriber share of [between 10 and 20%].

181 In the present case, the Commission states, in recital 388 of the contested decision that, according to its calculations, Three’s gross add share was higher than its market share.

182 However, the Commission acknowledges, in paragraphs 65 and 74 of the defence, that, according to its reconstruction of market shares and gross add shares, Three’s gross add shares for 2014 and the first half of 2015 were only slightly higher than its market shares in the same period. In other words, there is no major difference between Three’s gross add shares and its market shares.

183 In that regard, it should be pointed out that Three’s gross add shares do not indicate that Three would have more of an influence on competition than its market share would suggest. On the basis of the proposition most favourable to the Commission, namely that the undertaking experienced sustained growth, its gross add share would be [between 10 and 20%]. Such a figure is very low in comparison with the market shares described in recitals 335 and 343 of the contested decision. Moreover, such an addition must be regarded as very limited if compared with the figures relating to new subscribers of the undertakings that the Commission classified as ‘important competitive forces’ in its previous decisions, in Case M.3916 — T-Mobile Austria/Tele.ring (2006), COMP/M.6497 — Hutchison 3G Austria/Orange Austria (2012), and the German and Irish cases (see paragraph 164 above).

184 In response to a question put by the Court at the hearing on the importance to be attached, as evidence of the existence of a significant impediment to effective competition, to a gross add share which is [between 0 and 5%] higher than the market share, the Commission merely stated that that addition was only one indication among others for the purposes of its overall assessment of several factors in support of its findings in the contested decision.

185 In particular, the Commission contended that the fact that an operator such as Three has a gross add share which is even limited in relation to its market share is still sufficient to make it an ‘important competitive force’ when account is taken of the fact that it has continuously evolved on the relevant market. According to the Commission, the fact that, in the years preceding the adoption of the contested decision, Three recorded strong growth in its gross add share is a sufficient indication to establish that Three is a competitor exerting competitive pressure on the retail market.

186 However, it must be observed that, in relation to the market shares described in recitals 335 and 343 of the contested decision, a gross add share which could be quantified, in this situation — most favourable to the Commission’s case — with the highest growth rate, of approximately [between 10 and 20%], appears very low and is not comparable to the figures relating to new subscribers of the undertakings that the Commission classified as ‘important competitive forces’ in its previous decisions, in Case M.3916 — T-Mobile Austria/Tele.ring (2006), COMP/M.6497 — Hutchison 3G Austria/Orange Austria (2012), and the German and Irish cases (see paragraph 164 above).

187 Moreover, the applicant submitted, during the written part of the procedure and at the hearing, without being contradicted on this point by the Commission, that the gross add share of other undertakings that the Commission had also classified as ‘important competitive forces’ in the context of concentrations reducing the number of competitors from four to three in the mobile communication sector was between 21% and 50%, which is clearly not the case of Three.

188 It follows that, in any event, the Commission was not entitled to conclude from Three’s gross add shares that that operator was an ‘important competitive force’, in the context of a theory of harm based on non-coordinated effects.

189 Consequently, the Commission’s conclusion, in recital 397 of the contested decision, that Three’s gross add shares were ‘a first indication that Three exert[ed] on the retail market a greater competitive constraint than its market share would suggest’ is vitiated by an error of assessment.

190 The line of argument concerning, in essence, an error of assessment relating to Three’s gross add shares is therefore well founded.

(ii) The development of Three’s customer base

191 According to the applicant, the Commission made a manifest error of assessment in concluding, in recital 474 of the contested decision, that the evolution of Three’s market share was an indicator that it was an ‘important competitive force’. Indeed, the data set out in recitals 335, 343, 475 and 477 of the contested decision prove that Three’s growth is painfully slow.

192 The Commission maintains that Three’s market share by subscribers and revenues has been constantly growing. Three’s 1% per year growth rate, as provider, between 2013 and 2014, must be read in the context of a market in which no other player, with the exception of O2, was able to achieve such growth, as is illustrated in recitals 343 and 346 of the contested decision. Moreover, contrary to what the applicant claims, Three’s customer base was consistently [confidential] ( 1 ) in the market between 2010 and 2014, the total number of subscribers of Three, O2 and Vodafone having increased by [confidential] respectively and that of BT/EE having decreased by almost [confidential] (recital 477 of the contested decision).

193 The Court finds that the data set out in recitals 335, 343, 346 and 477 of the contested decision appear to show that Three experienced stronger growth than its competitors. In that regard, the Commission maintained that the General Court had ruled in the judgment of 14 December 2005, General Electric v Commission (T‑210/01, EU:T:2005:456), that constant growth in market shares is a convincing factor in terms of the competitive pressure exerted by an operator.

194 It must be stated that the strengthening of market shares over several consecutive years is indeed indicative of competitive strength. However, it is necessary to distinguish the present case from the findings made by the Court in the judgment of 14 December 2005, General Electric v Commission (T‑210/01, EU:T:2005:456), where the applicant was by far the leading supplier of aircraft engines, had the highest growth rate on the market, and was thus in a dominant position.

195 That reasoning is not applicable to the present case, which does not concern an undertaking in a dominant position which has strengthened its power on the market. The mere growth in gross add shares over several consecutive years of the smallest mobile network operator in an oligopolistic market, namely Three, which has in the past been classified as a ‘maverick’ by the Commission (Case COMP/M.5650 — T-Mobile/Orange) and in the Statement of Objections in the present case, does not in itself constitute sufficient evidence of that operator’s power on the market or of the elimination of the important competitive constraints that the parties to the concentration exert upon each other.

196 Moreover, the Court finds that, as the applicant submitted in its application and at the hearing, it is apparent from figures No 19 and No 20 of the contested decision that Three’s market shares stagnated or stabilised [between 5% and 10%] between 2012 and 2014, in terms of both subscribers and revenue. According to those figures, Three has experienced weak subscriber growth in recent years.

197 Accordingly, the Commission’s conclusion, in recital 474 of the contested decision, that the evolution of Three’s market share indicates that it was an ‘important competitive force’ is also vitiated by an error of assessment.

198 The line of argument alleging, in essence, an error in the assessment of Three’s growth in subscribers is therefore well founded.

(iii) Three’s pricing policy

199 The applicant claims that the Commission made a manifest error of assessment in concluding, in recitals 578 and 579 of the contested decision, on the basis of a ‘qualitative and quantitative pricing analysis’, that ‘Three has consistently exerted an important competitive constraint on the market with its tariffs’.

200 The applicant’s analyses show that Three charges prices slightly lower than those charged by other mobile network operators in the direct channel, but substantially more expensive than those charged by the other mobile network operators in the indirect channel and by the mobile virtual network operators.

201 As regards the qualitative pricing analysis carried out by the Commission, it ignores sales via indirect distribution channels, and contains a very limited analysis of sales by mobile virtual network operators.

202 The Commission maintains, as regards its own qualitative pricing analysis, that it expressly considered, in recitals 1032 to 1079 of the contested decision, the pricing position of mobile virtual network operators and indirect distributors, along with their limited ability to countervail the likely price effects arising from the transaction.

203 In addition, according to the Commission, the applicant’s quantitative analysis, set out in recital 604 of the contested decision, confirms that Three was the cheapest mobile network operator in the direct sale channel between October 2014 and February 2016.

204 As regards the qualitative price analysis carried out by the Commission set out in recitals 580 to 602 of the contested decision, it is apparent from this analysis, according to the Commission, that Three offered the most competitive market prices for a number of contracts, compared with the other mobile network operators, and among the most competitive on the market for others.

205 According to the applicant, the qualitative and quantitative pricing analyses included in its reply to the Statement of Objections, as well as in the study carried out by Hutchison, each show that Three’s prices were middle of the road, lying between those charged by other mobile network operators in the direct sales channel and those charged by the mobile virtual network operators in the indirect sales channel.

206 More specifically, a quantitative analysis of the parties based on 80000 prices, between 2014 and 2016, led, in the applicant’s submission, to the conclusion that Three was a ‘middle-of-the-road’ competitor, namely a ‘slightly cheaper’ competitor than other mobile network operators in the direct channel, but ‘substantially more expensive’ than the other mobile network operators in the indirect channel and the mobile virtual network operators. Moreover, the contested decision assumes that low pricing equates to an aggressive pricing policy, when in fact it may merely reflect a lower quality of offer or lower brand value, and therefore does not lead to a significant competitive impact.

207 According to the applicant, that exhaustive analysis of all prices on the market at the relevant time shows that Three’s pricing policy was in line with market prices. By contrast, the contested decision refers to selective, or even anecdotal, prices, in comparison with certain allowances at certain times, without however explaining the rationale for that selection.

208 In that regard, the Commission maintains that it included in its analysis the most representative handsets in the United Kingdom. In its view, even though the tariffs offered by operators present differences (in terms of data allowances, minutes of conversation and so on) and do not always offer identical conditions, they are nevertheless comparable.

209 The Court finds, contrary to the applicant’s submission, that the Commission took account, in recitals 584, 589, 590, 592 to 595 and 601 of the contested decision, of the tariffs of non-MNOs and of indirect distributors. Thus, while the Commission took account of the tariffs of mobile virtual network operators in the contested decision, it also stated that a number of tariffs, in particular those of Tesco Mobile and Virgin Mobile, were cheaper than Three’s.

210 Moreover, the Court notes that, in Case COMP/M.5650 — T-Mobile/Orange, the Commission found that, ‘in the UK mobile retail market, [mobile virtual network operators] play a significant role. … [Mobile virtual network operators] not only compete on price and consumer service with their host networks but they also stimulate competition by introducing innovative business models’.

211 In recital 969 et seq. of the contested decision, the Commission concluded that mobile virtual network operators were unable at the time to meaningfully constrain the competitive behaviour of mobile network operators on the retail market.

212 However, it does not follow from this that Three exerted significant competitive pressure through its pricing policy.

213 Without it being necessary for the Court to adopt a position on that matter, it must be held that the mere fact that Three’s tariffs include 4G services at no extra cost is not sufficient to prove that Three was pursuing a particularly aggressive pricing policy.

214 Similarly, as the applicant correctly observes, the mere fact that Three’s offer is cheaper for some and not for all market segments is not sufficient, in any event, to demonstrate that it is an ‘important competitive force’, since its pricing policy must be capable of significantly changing competitive dynamics.

215 In recitals 588 to 590, the contested decision merely states that Three’s prices are ‘among the lowest in the market’ and ‘among the cheapest for [the] low data segment’. That description of Three falls far short of proving that its pricing policy is capable of significantly altering competitive dynamics on the market.

216 The line of argument concerning, in essence, an error of assessment of Three’s pricing policy is therefore well founded, since the Commission has not shown, in the present case, to the requisite legal standard and by convincing evidence, that Three was competing particularly aggressively in terms of prices and that it forced the other players on the market to align with its prices or that its pricing policy was capable of significantly altering the competitive dynamics on the market, in accordance with the definition of the concept of ‘important competitive force’ set out in paragraph 170 above and which the Commission moreover itself set out in detail in its defence.

(iv) The role historically played by Three on the market

217 According to the applicant, the alleged evidence set out in recitals 497 to 575 of the contested decision, which relates to the role historically played by Three on the market, is anecdotal and does not support the conclusion that it is an ‘important competitive force’. The evidence which the applicant put forward demonstrates that Three’s initiatives, as referred to in the contested decision, had a limited impact on competition.

218 The Commission replies that Three’s historical role on the market is relevant, because it demonstrates its ability to cope with competitive challenges and is predictive of its future behaviour (recital 486 of the contested decision). Its initiatives contributed significantly to its yearly growth. The evidence in the file shows that Three played a substantial role in reducing 4G prices.

219 The Court observes that, in the contested decision, the Commission explained the manner in which Three, the most recent operator to enter the retail market, broke the industry trend of reining in data usage and increasing the price of data by launching its ‘One Plan’ (see recitals 497 to 522, and, in particular, recitals 515 and 522), by launching free international roaming (recitals 523 to 538) and by offering 4G at no extra cost, which obliged its competitors to abandon their strategies of selling 4G at a premium (recitals 539 to 572, and, in particular, recitals 565 and 572).

220 However, as the applicant observes, the marketing initiatives taken by Three, which are examined by the Commission in recitals 497 to 575 of the contested decision, in order to demonstrate the highly competitive conduct of that company, are now historical in nature, since they were mostly implemented prior to its major strategy shift from price-to brand-led competition in late 2013.

221 The Commission appears initially to have confirmed in its Statement of Objections its previous classification of Three as a ‘maverick’ on the United Kingdom mobile telecommunications market.

222 In paragraphs 1258 and 1357 of the Statement of Objections, the Commission concluded that, following the transaction, Three would become a market leader with little or even no incentive to disrupt any potential coordination. Following the transaction, there would thus be three non-disruptive undertakings on the market, which would be capable of producing coordinated effects on the market, whereas attempts at coordination had previously failed because of Three’s disruptive conduct.

223 Since the theory of harm based on coordinated effects was subsequently abandoned by the Commission in the contested decision, the Commission’s line of argument concerning Three’s historic role on the market is of anecdotal probative value in the overall analysis of the body of evidence in support of the first theory of harm.

224 Even if the Commission’s line of argument concerning Three’s historic role were as such correct, which the applicant does not seem to dispute in itself, the Commission has failed to establish in the contested decision that Three’s historic role was representative of its pricing policy at the time that the concentration was notified. The Commission’s reasoning in that regard seems to imply that an undertaking which has historically played a disruptive role will necessarily play the same role in the future and cannot reposition itself on the market by adopting a different pricing policy.

225 The line of argument alleging, in essence, an error in assessing the historic role played by Three on the market, and in particular its value as evidence of a significant impediment to effective competition, is therefore well founded.

226 In the light of all the foregoing, the complaint relating to the degree of competitive constraint exerted by Three on the retail market must be upheld.

(c) The assessment of the closeness of competition

227 Another factor on which the Commission relied in finding that the concentration would give rise to non-coordinated effects is the fact that Three and O2 ‘are close competitors on the overall retail market’ (recital 463 of the contested decision). That conclusion is based on a qualitative assessment of diversion ratios based on MNP (mobile number portability) data and diversion ratios based on a survey carried out by the Commission.

228 By the third part of the first plea, the applicant submits, in essence, that the Commission erred in finding that all four mobile network operators are close on the retail market (recitals 438 and 439 of the contested decision), that it failed to take into account the high degree of substitutability with third parties’ offerings, and that it wrongly concluded that Three and O2 were close competitors, although they were not the closest competitors. The Commission’s conclusion regarding the closeness of competition is vitiated by an error in law and a manifest error of assessment in that the institution failed to undertake an assessment of how close the parties are.

229 In the first place, the Commission submits that it carried out a relative assessment of the closeness of the parties (in accordance with the principles set out in recital 323 of the contested decision) and that it found that, for a large number of participants in its market investigation, Three and O2 were each other’s closest competitors (recital 417 of the contested decision). The internal documents of the parties (recitals 418, 430 and 438 of the contested decision), the diversion ratios (recitals 455 and 460 of the contested decision) and the survey which it commissioned (recital 461 of the contested decision) showed that Three and O2 are close competitors.

230 The Commission maintains, moreover, that it inferred from the evidence in the file that the four mobile network operators compete closely with each other in the retail market, which is not necessarily the case, however, for every four-player market or every oligopolistic market.

231 In the second place, the Commission contends that, while the degree of substitutability with non-merging firms does affect the reaction of such rivals to price increases adopted by the merged entity, it does not alter the elimination of important competitive constraints which the merging parties exert on one another, which is the most direct effect of a merger on an oligopolistic market, and which enables that effect to be measured.

232 In addition, while it is not required that the parties to a concentration should be each other’s closest competitor (recital 324 of the contested decision), the fact that other competitors are equally close competitors, or even closer competitors than the merging parties, does not refute the existence of a significant impediment to effective competition. Evidence of substitutability between the merging parties’ products and those of non-merging firms is therefore of secondary importance, as compared with evidence of the substitutability of the products of the merging parties.

233 In the third place, the Commission does not dispute that, according to the diversion ratios based on the MNP data [confidential]. However, in order for a unilateral price increase to be profitable for the merged entity, what matters is not that the merging parties’ products should be each other’s closest substitutes (recitals 324 and 1193 of the contested decision), but that the merging parties should be close competitors and that their rivalry has been an important source of competition in the market (recital 463 of the contested decision).

234 The Court notes that the concept of a ‘close competitor’ does not appear in Regulation No 139/2004 but only in the Guidelines, which include a section headed ‘merging firms are close competitors’.

235 Moreover, the applicability of Article 2(3) of Regulation No 139/2004, read in the light of recital 25 of that regulation, requires the elimination of important competitive constraints that the merging parties had exerted upon each other, which constitutes the most direct unilateral effect of a concentration on an oligopolistic market, as the Commission rightly pointed out before the General Court.

236 In that regard, ‘closeness of competition’ was already accepted as an economic item of evidence by the Court in the judgments of 9 July 2007, Sun Chemical Group and Others v Commission (T‑282/06, EU:T:2007:203), and of 6 July 2010, Ryanair v Commission (T‑342/07, EU:T:2010:280, paragraph 63 et seq.).

237 The judgment of 6 July 2010, Ryanair v Commission (T‑342/07, EU:T:2010:280), related to the use of the concept of ‘closest competitors’ and the question whether the Commission could automatically infer from this concep