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Telefonica Deutschland's E-Plus takeover faces legal challenge
June 8, 2015 / 10:03 AM / 2 years ago

Telefonica Deutschland's E-Plus takeover faces legal challenge

FRANKFURT (Reuters) - German regional wireless operator Airdata has challenged the EU’s approval of Telefonica Deutschland’s (O2Dn.DE) 8.6 billion euro ($9.6 billion) acquisition of E-Plus, saying concessions offered to allay competition concerns did not go far enough

The headquarters of German mobile phone operator E-Plus Group is pictured in Duesseldorf July 24, 2013. REUTERS/Wolfgang Rattay

The takeover completed last year reduced the number of national mobile carriers in Germany to three from four, leaving Telefonica Deutschland competing with Deutsche Telekom (DTEGn.DE) and Vodafone (VOD.L).

Airdata said late on Sunday that the remedies enforced as a condition of the merger were insufficient and there was no fair competition in the German telecoms market. It took its case to the Luxembourg-based General Court, Europe’s second-highest.

Telefonica agreed a year ago to open a fifth of its future combined network to small rival Drillisch (DRIG.DE) to smooth the way for clearance of the E-Plus deal and let Drillisch buy a further 10 percent of its German network capacity.

Prices offered by mobile virtual network operators (MVNOs) such as Drillisch, which rent space from network operators, tend to be cheaper than others. But Drillisch’s prices have largely kept pace with those of its bigger rivals.

A German auction of wireless frequencies, in which only the three existing operators were permitted to take part, has raised bids worth 2.56 billion euros so far -- close to the lower end of market forecasts -- and is expected to end soon.

The European Commission, which cleared the deal, said it would defend its decision in court. The last successful appeal against a merger finding was in 2002.

U.S. delivery company UPS (UPS.N) is currently waiting for a ruling on the Commission’s veto on its proposed merger with Dutch peer TNT TNTE.AS.

Telefonica Deutschland said it had taken notice of the complaint and would look into the details. It added that it would not have an immediate effect on the merged company and its operations.

Shares in Telefonica Deutschland ended down 0.5 percent at 15.4 euros on Monday versus a 0.76 percent drop in the European telecoms index .SXKP.

Airdata this year challenged the German telecoms regulator in a Cologne court over the conditions the watchdog had set for the current frequencies auction.

It also challenged the 2010 spectrum auction in court, according to the company’s website.

Additional reporting by Foo Yun Chee in Brussels; Editing by David Goodman and Mark Potter

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