In 2002, T-Mobile and O2 notified the European Commission (EC) that they wished to have an agreement to share 3G site infrastructure and to allow roaming between their respective 3G networks in Germany.
The EC did not object to site sharing, but argued that national roaming restricted competition because of its effect on coverage, roll-out, prices, and quality of service, especially in urban areas where there were good opportunities for the roll-out of competitive networks. Nonetheless, the EC considered that the agreement would promote market entry, leading to better and quicker 3G services and increasing retail competition in Germany. The EC therefore considered that the agreement could be exempted for a short start-up period until O2 had set up its own network. This exemption would be phased out across specific cities and regions, as well as rural areas, covering about 50 per cent of the population by the end of 2008.
O2 challenged this decision before the European Court of First Instance, claiming that there was no restriction of competition, and that the EC analysis of the effect of the agreement on competition was flawed.
In 2006, the European Court of First Instance broadly accepted the view of O2 and annulled the decision of the EC on national roaming. The European Court of First Instance considered that the EC had not properly assessed the extent to which the agreement was necessary for O2 to enter the market. The EC’s assessment that national roaming restricts competition was based on general statements about roaming agreements, not on concrete evidence specific to the agreement for that market. The EC also failed to demonstrate that any price dependence between the parties limited the freedom of O2 to set its prices on the market.
In fact, the European Court of First Instance agreed that the dependence of O2 on T-Mobile had been designed to be temporary.
The European Court of First Instance considered that such a roaming agreement, rather than restricting competition between network operators, may actually increase competition by letting a small network operator (in this case O2) compete with a large one (in this case T-Mobile).
Source: Commission Decision on German 3G Mobile Network Sharing Agreements Partially Annulled (Bird & Bird, May 2006) and O2 v. Commission, Judgment (European Court of First Instance (Fourth Chamber), May 2006, Case file No. T‑328/03.
Practice Note, "Mobile Sharing in the European Union"
Practice Note, "National Roaming"
Commission Decision of 16 July 2003 relating to a proceeding under Article 81 of the EC Treaty and Article 53 of the EEA Agreement, Case COMP/38.369: T-Mobile Deutschland/O2 Germany: Network Sharing Rahmenvertrag, OJ 2004, L 75/32