Europe's competition watchdog has been accused of making "several errors of law" in blocking a major telecoms merger between mobile networks Three and O2.
The decision to block the merger was annulled by a top European court, calling into question decisions from the European Competition commissioner on a number of major telecoms deals since 2016.
The European General Court in Luxembourg ruled against the decision by Competition Commissioner Margrethe Vestager, who blocked the £10.25bn takeover of O2, owned by Spain's Telefonica, by rival network Three, owned by Hong Kong's CK Hutchison.
A CK Hutchison spokesman said the ruling could force the Commission to “fundamentally revisit its approach to merger reviews”.
The deal is a rare setback for Ms Vestager, who has proved a powerful check against deals in a number of sectors. It will provide relief for future telecoms sector deals with companies keen to share the cost of new 5G and broadband equipment.
At the time, the Commission found the merger would have created a mobile firm with 40pc market share, which it believed would lead to prices going up, while also making it harder for smaller operators to compete.
CK Hutchison had challenged the Commission's argument. The conglomerate argued that the Commission's view that European telecoms markets needed four mobile network operators was "misconceived". It added that the decision had caused several other deals, such as a merger between Danish telecoms firms, to collapse.
A spokesperson said: “The Commission’s approach has unfortunately acted as a brake on, or in a number of cases prevented, vital industry consolidation in Europe which would have resulted in significant new investment, innovation and benefits for European consumers and industry.”
The Judges ruled the Commission had not found enough evidence that prices would have been pushed up in the deal. It also found that, even if the deal had caused disruption to small virtual network operators, this would not have been a “significant impediment” to block the merger.
The decision could ease concerns that new plans to combine Virgin Media, the UK broadband business, with O2 in a joint venture will face kickback from competition regulators.
Virgin's business is concentrated in fixed line broadband and O2 serving mobile customers. The Three and O2 deal, however, provoked concerns as it comprised two businesses concentrated on consumer mobile customers.
A commission spokesperson said: “The commission will carefully analyse the judgment.”