Germany's anti-trust body raises concerns over Telefónica/E-Plus plan

Germany's antitrust watchdog remains concerned that a proposed merger between Telefónica Deutschland and KPN-owned E-Plus would be detrimental to mobile pricing competition in the country, even though the European Commission is understood to be close to approving the deal.

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Joaquín Almunia

According to a report in the Financial Times, the Bundeskartellamt is worried that remedies suggested by Telefónica to mitigate the impact of a reduction in the number of operators from four to three would not be enough in a market that still has some of the highest mobile data prices in Europe.

A spokesman for the Bundeskartellamt told FierceWireless:Europe that the office was unable to comment on the case since investigations were still ongoing. "I can confirm however that we have expressed concerns against proposed remedies in a letter to the commission in May," the spokesman added.

It was reported last week that European competition regulators were on the brink of clearing Telefónica's planned €8.6 billion ($11.7 billion) acquisition of E-Plus.

Joaquín Almunia, the head of the EU's antitrust unit, was said to be happy with proposals submitted by the Spanish operator that would enable new players to enter the German market to maintain competition in the country.

Telefónica has reportedly offered to open up 30 per cent of a combined Telefónica Deutschland and E-Plus network to three virtual network operators, to address the European Commission's concerns about the deal.

Bundeskartellamt concerns that Telefónica's pledge to give rival operators access to infrastructure would not compensate for the reduction in Germany's network operators mirror similar complaints from other national regulators in markets where the Commission has approved mergers, such as Austria and Ireland.

For example, after the Commission approved the acquisition of Telefónica's O2 Ireland by Hutchison Whampoa, Ireland's telecoms regulator, ComReg, said the Commission had done little to protect consumers.

Meanwhile ratings agency Moody's said last week that conditions imposed by the European Commission on mergers between telecoms operators in the region could limit the competitive impact of consolidation that is desired by operators, and would not ease price competition within markets.

Indeed, planned mergers in Europe that would reduce the number of operators within a market from four to three are proving very divisive: operators say they need consolidation to lessen the impact of ruinous price wars, and in some markets such as France they are backed by government ministers.

On the other hand, regulators continue to worry about the impact that a reduced number of competitors would have on consumer prices.

For more:
- see this Financial Times article (sub. req.)

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