The European Commission has extended the duration of its merger review into Telefonica Deutschland’s (O2) €8.55bn (US$11.7bn) acquisition of mobile operator E-Plus from Dutch telco KPN by 10 working days.
The deadline for the investigation is now…
The European Commission has extended the duration of its merger review into Telefonica Deutschland’s (O2) €8.55bn (US$11.7bn) acquisition of mobile operator E-Plus from Dutch telco KPN by 10 working days.
The deadline for the investigation is now 28 May, after all the parties agreed to lengthen the case under Article 10(3) of the EC’s merger regulation legislation.
The Commission’s in-depth phase II review was due to conclude on 14 May. The extension gives Telefonica more time to devise remedies.
Speaking at a conference this morning, Joaquin Almunia – the EU’s antitrust chief – was quoted as saying that he expected the EC to announce a decision on the E-Plus merger in June.
Telefonica’s takeover has caused concerns as it would shrink the number of mobile players in Germany from four operators to three.
The proposed merger follows a similar consolidation deal last year in Austria between Hutchison and Orange, which was eventually approved with significant remedies.
The EC is also in the process of reviewing Hutchison’s merger with Telefonica’s O2 Ireland subsidiary, which again would take the Irish market down to three mobile network operators.
However, it has been argued that the E-Plus deal is different given the sheer size of the German market compared to that of Ireland or Austria.
The EC previously expressed concern that “the transaction would remove an important competitive force and change the merged entity’s incentive to exert significant competitive pressure on the remaining competitors”.
Germany’s Federal Cartel Office (FCO) had asked the EC for permission to review the deal itself in November.
However, the Commission concluded that it was “better placed” to assess the case due to its experience in assessing mergers in the mobile sector and cited the need for a consistent application of merger control rules in the EU.
O2 Ireland review paused
The EC ‘paused’ its review process into the €850m Ireland deal on 2 April to await further details from Hutchison on the remedies it is proposing to get regulatory approval.
The so-called ‘stop the clock mechanism’ will extend the 19 May deadline by each working day it is in effect, giving regulators more time to digest the measures that have been put forward.
A person familiar with the deal said it was unlikely to be in effect for more than “a couple of weeks”.
Hutchison’s remedies are understood to include a plan that would initially offer an MVNO to a new market entrant, which will later have the opportunity to buy spectrum and up to 75,000 customers from its combined entity.
Irish cableco UPC is likely to be a frontrunner to become this new entrant, because it is thought to have discussed launching an MVNO in the past.
Hutchison and UPC declined to comment.
