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German telecoms company Airdata challenges Telefónica purchase of E-Plus

German telecoms company Airdata has filed a legal challenge against the decision by the European Commission to allow Telefónica to buy E-Plus from KPN for €8.6 billion. 10 Jun 2015

Airdata has asked the EU general court to decide whether the decision to approve the deal was lawful, it said in a statement (link in German). If it was not, the merger should be reconsidered, it said.

The conditions imposed on the merger were insufficient and there is now no fair competition in the German telecoms market, board member Christian Irmler said in the statement.

The market has "narrowed significantly" to just three mobile operators: Deutsche Telekom, Vodafone and Telefónica, who can now dictate prices, Imler said.

Airdata is also going to court over the way that spectrum use is being allocated, saying that under spectrum licence conditions Telefonica should have returned some of its frequencies to the government, but didn't. Those frequencies include some that Airdata itself uses.

"The Federal Network Agency has repeatedly told us to switch off our regional broadband networks, because Telefónica needs the frequencies," Irmler said.

The decision to allow the combined Telefónica and E-Plus to use these frequencies is illegal, Irmler said, and this will be considered by the Cologne Administrative Court on 10 June.

In March, European competition commissioner Margrethe Vestager said that telecoms mergers must not raise consumer prices.

"I have one interest and that is to make sure that European consumers —citizens or businesses — can enjoy relatively innovative markets at affordable prices," she told the Financial Times.

Past consolidation has not led to improved infrastructure, Vestager said. In fact, she told the Financial Times, "I have seen a number of examples of the opposite. So far it seems as if it is still competition that will lead to investment and not the other way round."

In December, the European Commission opened an in-depth investigation to assess whether the proposed acquisition by France’s Orange of UK registered telecoms firm Jazztel was in line with the EU Merger Regulation.