EC fears price increases from O2, E-Plus merger - report

Telefonica's propsoed takeover of German operator E-Plus could raise mobile prices by up to a third for some customers, according to the European Commission. This was part of the conclusions of its initial evaluation of the proposed takeover, which would see Germany's third- and fourth-largest mobile operators merged. The EC competition authorities sent its first opinion on the deal to the companies on 26 February, the Financial Times reports. 

According to people familiar with the 'statement of objections' draft, antitrust officials estimated that post-merger, the average price of a mobile plan would rise by 13-17 percent. This is broken down to a 26-37 percent increase in the prepaid market for customers without a lengthy contract, where the merged group would wield a market share approaching 60 percent. In the postpaid market, there could be a 9-12 percent jump. 

E-Plus' owner KPN said the objections are "common practice in such a regulatory review". Telefonica said it was "optimistic" about winning approval for the deal, which is said would increase competition and "challenge the market leaders with attractive products and prices". Telefonica will have the opportunity in the coming weeks to challenge the commission's conclusion. It will probably point to another quantitative model cited in the draft objections that predicts a more modest 5-9 percent average rise.