Report: Regulators up in arms over proposed approval of Telefónica's E-Plus buy

Europe's national regulatory watchdogs are up in arms over the proposed merger of Telefónica Deutschland and KPN's E-Plus in Germany, according to a report by the Financial Times.

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Joaquin Almunia

The largest telecoms takeover deal to be proposed in the last 10 years is causing waves of dissent amongst European watchdogs. At a recent meeting to review the merger, only two of 12 national authorities that were present voted in favour of the European Commission's planned competition remedies, according to the FT, which cited two officials involved.

The FT noted that national regulators generally allow Brussels to take the lead in these situations, but the €8.8 billion ($11.9 billion) German proposal has irritated the advisory committee. The report said that Austria, Germany, Ireland, Italy and the UK voted against the merger, while Denmark, France, the Netherlands, Portugal and Spain voted against it. Just Belgium and Sweden voted for the takeover bid.

The reason for the committee's dissent on the deal is thought to be the potential damage that reduced competition could have on the market's evolution in terms of the development of infrastructure. Those that voted against the deal said they believe that by reducing Germany's mobile operators from four to three, prices for consumers would go up and competition would be held back.

However, the outcome of the vote will not force a formal review of the merger, as a majority of at least 15 votes must be registered for the EU antitrust enforcer, Joaquín Almunia, to revisit his decision.

Telefónica managed to push the takeover bid for E-Plus though Almunia's team by stating it would allow up to 20 per cent of its network capacity to be used by mobile virtual network operators (MVNOs).

In a similar instance, Hutchinson Whampoa in Ireland (H3G) has recently received EC permission for a €780 million ($1 billion) acquisition of Telefónica Ireland, merging O2 Ireland with 3 Ireland. To allow the deal to pass regulatory watchdogs, H3G will allow two mobile virtual network operators (MVNOs) to buy up to 30 per cent of the merged company's network capacity.

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

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