The European Commission on Wednesday said it is investigating whether Telefonica Deutschland's plan to sell network capacity to virtual player Drillisch meets the requirements for its conditional approval of Telefonica's acquisition of E-Plus.
The €5 billion merger was approved in July after Telefonica committed to a number of remedies aimed at safeguarding competition in the German mobile market. One of them will see Telefonica sell 20% of the combined entity's network capacity to Drillisch, which will have the option to acquire an additional 10% at a later date.
Before Telefonica Deutschland can close its acquisition of E-Plus though, it needs to finalise its agreement with Drillisch.
In order for that to happen, "the Commission needs to verify whether the buyer and the commercial conditions negotiated fulfil the requirements set out in the commitments, and to approve the buyer," explained European Commission spokesman Antoine Colombani, in an email to Total Telecom.
The comments came after a report by a German news outlet suggested that the Commission planned to reinvestigate the Telefonica/E-Plus deal.
Unnamed sources cited by WirtschaftsWoche claimed the EU wanted to re-examine the merger to allay concerns that Telefonica's deal with Drillisch would not ensure a sufficient level of competition.
According to the report, German Internet provider United Internet and telco Freenet were in the final stages of negotiating capacity agreements with Telefonica but lost out to Drillisch at the last minute. United Internet in particular alleged that with 1.9 million MVNO customers, Drillisch lacks the scale to compete effectively with the big three – Deutsche Telekom, Vodafone and Telefonica – in the mobile sector.
"The Commission is not re-examining this case," insisted Colombani, who said that analysing Telefonica's agreement with Drillisch is standard procedure. He did not provide a timeframe for the process, but said the Commission will disclose its conclusions once they have been reached.