German Cartel Office says KPN-Telefonica deal needs close scrutiny

FRANKFURT Tue Aug 20, 2013 3:56pm EDT

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FRANKFURT (Reuters) - The proposed tie-up of the German units of KPN (KPN.AS) and Telefonica (TEF.MC) will require close scrutiny by the German Cartel Office, the head of the antitrust watchdog said.

"It is evident that such a combination would have a considerable impact on competition and will have to be investigated closely in all is facets," the office's President Andreas Mundt told Frankfurter Allgemeine Zeitung (FAZ) newspaper in an excerpt of an article to be published on Wednesday.

"This is clearly a case for Bonn," he said in the excerpt, made available to Reuters on Tuesday, referring to the city where the cartel office is based.

Dutch telecoms group KPN last month agreed to sell its German unit to Spain's Telefonica for 8.1 billion euros ($11 billion) in cash and shares.

If KPN's disposal of the E-Plus unit goes through, the new company would hold a share of about 30 percent of Germany's mobile service revenue and would be better placed to take on Deutsche Telekom (DTEGn.DE) and Vodafone (VOD.L), with 35 percent each.

Mexico's America Movil (AMXL.MX), which has bid for the 70 percent of KPN it does not already own, said it was still deciding whether to back the deal.

FAZ quoted Mundt as saying that the German Cartel Office and not the European Commission should "clearly" be in charge of regulatory scrutiny of the deal.

Antitrust regulation of the German telecoms sector made headlines earlier this month when a court ordered the cartel office to re-examine U.S. cable company Liberty Global's (LBTYA.O) acquisition of its German peer KabelBW, which was approved at the end of 2011.

Mundt told FAZ that he would have expected the conditions the cartel office had initially imposed on Liberty Global to have a stronger effect on competition in the German cable industry than they turned out to have.

Mundt was also quoted as saying the German cartel office was happy to let the European Commission decide on the planned takeover of Germany's largest cable provider, Kabel Deutschland (KD8Gn.DE) by Vodafone.

"After a first, preliminary assessment on our part, this is rather a complementary tie-up."

(Reporting by Ludwig Burger; Editing by Anthony Barker)

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