German Merger Risks Bigger Than Slim for O2, E-Plus Owners

Telefonica SA and Royal KPN NV, weighing a $20 billion merger of their German businesses, would probably face protracted regulatory scrutiny delaying any savings and restricting potential stock gains.

A combination of Telefonica’s O2 and KPN’s E-Plus would cut the number of network operators in Germany to three and create the country’s largest wireless-service provider by customers. An antitrust review could drag into 2013, with possibly different outcomes depending on whether the European Commission or the German Federal Cartel Office takes on the case, said Frederik Wiemer, an antitrust lawyer at Heuking Kuehn in Hamburg.