EC keeps grip on Telefónica Deutschland, E-Plus probe

Telefónica Deutschland's planned acquisition of domestic rival E-Plus from KPN will not be scrutinised by German competition authorities, after the European Commission declined to relinquish control of a probe into the effects of the deal on the German market.

The Commission said it is better placed to investigate the proposed €8.55 billion (€11.5 billion) acquisition, which will create the largest mobile operator in Germany by subscriber numbers, and cut the number of players in Europe's largest mobile market from four to three.

The Commission added that it has greater experience of assessing the impact of mergers and acquisitions in the mobile sector, and of the broader implications in relation to European Union merger rules.

Germany's Federal Cartel Office had argued it was best placed to rule on the competitive impact of the acquisition on Germany's mobile and wholesale markets, when it requested access to details of the acquisition from the Commission in November.

While the Commission will continue investigating the impact of the deal--it has until May 14, 2014 to reach a decision--it said it will work closely with Germany's competition authority to reach its decision.

The ruling came a day after Telefónica Deutschland announced that chief strategy officer, Markus Haas, will take over E-plus integration preparations, following the departure of CEO René Schuster as of Friday (Jan. 31). Control of the company's operational business passes to CFO Rachel Empey.

Schuster will continue to act as an advisor to Eva Castillo, chair of the Telefónica Deutschland Holding board--a company in which Telefónica holds a near 80 per cent stake, Reuters reported.

In addition to setting up the E-Plus deal, Schuster is credited with establishing Telefónica Deutschland's LTE service--from winning the licence to deploying the network--and overseeing one of the largest IPOs in Europe in 2012. Schuster also handled the acquisition of HanseNet in 2010, which boosted the operator's fixed-line subscriber count.

Meanwhile, an initial list of the European Commission's objections to a proposed sale of Telefónica's Irish O2 business to Hutchison Whampoa could be published by the close of Friday, Bloomberg reported.

For more:
- see this EC release
- see this Reuters article
- see this Bloomberg article

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