EU sends TomTom formal objections to Tele Atlas deal

BRUSSELS (Reuters) - The European Commission is sending a "statement of objections" to TomTom TOM2.AS on its plans to purchase its main map supplier, Tele Atlas TA.AS, a source with knowledge of the situation said on Saturday.

TomTom, the world’s biggest maker of car navigation devices, had offered some remedies to meet concerns within the European Commission that the deal would be anti-competitive.

While TomTom submitted its remedies the formal notice of objections hung in the balance

But in the end, the European Union executive was unable to accept them before the deadline for sending the “statement of objections”, which lays out competition problems with the deal.

The statement does not, however, mean the deal will be rejected. Instead, it means that TomTom will have to come up with better remedies. The deadline for a decision is May 5.

Experts say that if a statement of objections is issued it slows and complicates the process because it creates a formal, written record of problems with the deal.

The deal would let TomTom move beyond hardware where double-digit profit margins are expected to decline in line with other consumer electronics makers, analysts said.

Tele Atlas also supplies online mapping Web sites such as Google Maps GOOG.O, as well as mobile phone maker Nokia NOK1V.HE.

TomTom and Tele Atlas said when the deal was announced they planned to tap into TomTom’s user base to get feedback on where maps were out of date and gather statistical information on traffic flows to create new features such as daily map updates and predicting traffic jams.

Reporting by David Lawsky, Editing by Peter Blackburn