BRUSSELS Dec 20 EU antitrust regulators opened
on Friday an in-depth probe into Telefonica's
proposed 8.6 billion euro ($11.9 billion) takeover of KPN's
German unit, saying the deal may reduce competition in
the German mobile market.
Spanish telecoms provider Telefonica's takeover of KPN's
E-Plus will put it on par with market leaders Deutsche Telekom
"At this stage, it cannot be excluded that the reduction in
the number of competitors following the merger would increase
the likelihood that MNOs (mobile network operators) will
coordinate their competitive behaviour and increase prices," the
European Commission, which acts as the EU's competition
watchdog, said in a statement.
The European Commission set a May 14 deadline for its
decision. Reuters had reported on Dec. 12 that the EU watchdog
would examine the case in detail.
The case is crucial for the European telecoms industry,
which sees itself in need of consolidation but is wary of
competition regulators demanding onerous concessions to ensure a
level playing field among fewer players.
In 2012, the Commission allowed Hutchison to buy
Orange's Austrian unit on the condition that they
would help new operators to enter the market.
According to Citigroup analysts, Telefonica and KPN will
need to make some significant concessions to get regulatory
"We expect Telefonica Deutschland/E-Plus will be mandated to
offer some form of a wholesale reference offer to be available
to (mobile virtual network operators) MVNOs/service providers
and on a national roaming basis (in case a new entrant
emerges)," they wrote in a client note.
EU regulators may want a fourth mobile operator to boost
competition as the deal reduces the number of mobile providers
in Europe's biggest market from four to three, technology and
telecoms consultant firm Rewheel said in a note last month.