December 12, 2013 / 3:08 PM / 5 years ago

EU to open lengthy probe into Telefonica, KPN deal: sources

People are reflected as they walk past Spanish telecom group Telefonica's flagship store in central Madrid November 8, 2013. REUTERS/Sergio Perez

FRANKFURT/BRUSSELS (Reuters) - EU antitrust regulators will open an in-depth probe into Telefonica’s proposed 8.6 billion euro ($11.9 billion) takeover of KPN’s German unit next week, three people familiar with the matter said on Thursday.

The European Commision will reject a German request to take over examination a deal that will reduce the number of mobile telecoms operators in Europe’s biggest market from four to three, they added.

Telefonica announced the deal in July, which will broadly put it on an equal footing with market leaders Deutsche Telekom and Vodafone.

The case could mark a watershed for the European telecoms industry, which sees itself in need of consolidation but is wary of competition regulators demanding onerous concessions to ensure a level playing field among fewer players.

“The Commission is expected to open an in-depth probe into the case next Friday,” said one of the sources who declined to be named because of the sensitivity of the matter. Such investigations typically take 90 working days, but can be extended by a few more weeks.

The EU competition regulator originally set a December 6 deadline for its preliminary review of the deal, but extended that to December 20 to consider a request from the Bundeskartellamt to take over the case. The opening of an in-depth investigation automatically means that the German bid will be rejected.

A lengthy probe could allow the companies to better counter regulatory concerns with specific concessions. KPN Chief Executive Eelco Blok had indicated as much when he said in early October he expected the competition authorities to clear the proposed deal in mid-2014.

The Commission, KPN’s E-Plus and Telefonica Deutschland declined to comment. A spokesman for the German antitrust watchdog declined to comment and said the Bunderkartelamt would wait for the decision. ($1 = 0.7251 euros)

Reporting by Peter Maushagen and Harro ten Wolde in Frankfurt and Foo Yun Chee in Brussels

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