From the Super Mario Wiki
Sonic Arrives (also referred to as Sonic Episode 1 and Sonic 1) is the first Sonic episode in the Story Mode of the Nintendo 3DS version of Mario & Sonic at the London 2012 Olympic Games. This episode is unlocked after watching the Story Mode's opening, and unlocks The Ghostly Tower upon its completion. This, along with Stadium Blues, must be completed to earn the Story Mode 1 badge, and its completion is also required to earn the Story Mode Cleared badge.
Sonic and Tails are enjoying sightseeing in London, when red Phantasmal Fog begins to appear. Omochao and a yellow Toad notice the fog rolling in, and decide to head off. Sonic and Tails are confused by the fog, before a Boo appears telling everyone to run away. Sonic and Tails decide to investigate when they are approached by Fog Imposters of Mario and Luigi who they believe to be the real characters, and ask them to help investigate. The Fog Imposters refuse to let Sonic and Tails leave until they beat them in an Olympic Event. Fearing that the fog may cancel the opening ceremony, Sonic and Tails accept the challenge.
Sonic and Tails defeat the Fog Imposters, still believing that they are the real Mario and Luigi, but do not think that they seem their usual selves. The Fog Imposters disappear, causing them to come to the conclusion that they are imposters. They overhear the Boo talking about how to the fog was taking the form of athletes as planned, and decide to follow it to the Tower of London to ask it some questions.