FCO warns that Telefonica/E-Plus deal could harm consumers

16 Jun 2014

Germany’s Federal Cartel Office (FCO) has warned Brussels that remedies submitted by Telefonica to win antitrust approval for its acquisition of German mobile rival E-Plus do not go far enough, and could lead to higher prices for consumers, the Wall Street Journal reports, citing a person familiar with the matter. In a letter to EU antitrust chief Joaquin Almunia last month, FCO president Andreas Mundt warned that remedies put forward by Telefonica to address concerns about the EUR8.55 billion (USD11.6 billion) deal would not preserve competition in the market and that prices could rise after the merger. Spanish telecoms group Telefonica has allegedly proposed the release of up to 30% of the spectrum held by the combined Telefonica/E-Plus for use by three mobile virtual network operators (MVNOs). According to the unnamed source, the letter pointed to Hutchison’s acquisition of Orange in Austria which was approved by the European Commission (EC) in 2012, but led to price increases, despite Brussels demanding that the companies set aside spectrum to allow for the entrance of a fourth player.

Netherlands-based KPN agreed to sell E-Plus to Telefonica in July 2013 and in December the EC opened an in-depth investigation into the transaction, TeleGeography’s GlobalComms Database notes. If approved, the combination of Telefonica and E-Plus would reduce the number of network operators from four to three, with the enlarged Telefonica becoming the market leader ahead of Telekom Deutschland and Vodafone Germany. Late last month the EC extended the deadline for its decision on the deal by a further five working days to 10 July.

Germany, E-Plus Group, KPN, Telefonica, Telefonica Deutschland Holding