EU Rejects German Request to Review Telefonica, E-Plus Deal

BRUSSELS--The European Commission Thursday rejected a renewed request from Germany's competition authority to review Telefonica Deutschland AG's (O2D.XE) proposed acquisition of E-Plus, the German unit of KPN Mobile NV (KPN.AE).

The commission said it was "better placed" to review the 8.6 billion euros ($11.6 billion) deal because of its "experience in assessing mergers in the mobile telecommunications sector" and the need for a consistent application of European Union merger rules.

The decision had been expected since the commission said last month it was launching a detailed probe into the deal, thereby de facto rejecting an initial request by Germany's antitrust body, the Federal Cartel Office, to review the merger.

Telefonica Deutschland, Germany's fourth-largest mobile network operator and a unit of Telefonica SA, formally asked the commission in late October to approve the deal. It needs antitrust approval because the merger would reduce the number of mobile operators in Europe's largest telecoms market to three from four and would make the combined entity Germany's market leader by number of customers.

German regulators asked to review the deal themselves in November, arguing that it affected only the national market. The German cartel office sent a renewed request to the commission on Jan. 2., a spokesman for the cartel office told The Wall Street Journal earlier this month.

The commission said it has until May 14 to take a final decision on whether to approve the merger.

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