As expected, Telefónica's German unit looks set to encounter objections from European Union (EU) regulators over its €8.55 billion ($11.76 billion) plan to buy and merge with KPN's E-Plus, and so create a formidable rival to Deutsche Telekom and Vodafone Germany.
Citing unidentified sources, Reuters reported Telefónica will soon receive a formal complaint from the European Commission (EC), which is concerned that the deal may harm competition in Germany. The acquisition of E-Plus by Telefónica Deutschland would reduce the number of operators in the country from four to three.
Such a move by the Commission would not be unexpected: it recently sent a list of concerns to Hutchison Whampoa's 3 Ireland over its planned acquisition of Telefónica's O2 Ireland for up to €850 million ($1.1 billion).
The Commission opened an in-depth investigation in December to assess whether the planned acquisition of E-Plus by Telefónica Deutschland is in line with the EU Merger Regulation.
Despite calls for a more relaxed mergers and acquisitions environment by leading telecoms executives all over Europe, it appears that EU antitrust chief Joaquin Almunia is concerned that national markets are "often highly concentrated with only a limited number of network operators", Bloomberg reported
The Commission has until May 14, 2014 to reach a decision on the Telefónica Deutschland and E-Plus deal. It recently refused to cede control of the probe to German competition authorities, which had argued they were best placed to rule on the competitive impact of the acquisition on Germany's mobile and wholesale markets.
3 Ireland plans remedies for EU concerns on O2 merger
EC keeps grip on Telefónica Deutschland, E-Plus probe
Report: Telefónica faces long EC probe into E-Plus deal with KPN
Germany challenges EU over right to examine Telefónica's E-Plus deal
KPN shareholders approve sale of German E-Plus unit to Telefónica