EU Won’t Prejudge Possible Issues With Telefonica-KPN Deal

The European Union said it won’t make any determinations on Telefonica SA’s acquisition of Royal KPN NV’s E-Plus unit before the deal has been formally notified.

“The O2/E-Plus deal has not yet been notified to the European Commission for review,” Antoine Colombani, a spokesman for EU Competition Commissioner Joaquin Almunia, said in an e-mailed statement today. “We have no concerns at this stage because we have not yet investigated.”

The EU issued the statement after Almunia told reporters in Vilnius, Lithuania, earlier today that he has “no concerns” about the deal. “I have some preliminary information, but the proposed merger has not yet been formally notified. We are in preliminary contacts with the parties involved,” Almunia told reporters.

The 8.55 billion-euro ($11.6 billion) sale, which will merge the two companies’ German units, is one of two deals that may transform the country’s telecommunications industry once dominated by Deutsche Telekom AG. EU regulators have already given the go ahead to Vodafone Group Plc’s bid for Kabel Deutschland Holding AG.

“The commission never has any a priori bias about any mergers before investigating them,” Colombani said in the e-mail today. “Our investigation will determine whether we identify any competition concerns regarding this proposed acquisition.”

Last month in Florence, Italy, Almunia said that he would reject calls by German regulators that sought to review the deal at the national level. Andreas Mundt, the head of the German Federal Cartel Office, said in August that the Telefonica deal only affects his country and should be reviewed by his office.

KPN Chief Executive Officer Eelco Blok said yesterday that he was confident the deal would win EU approval.

“All the work we have done with Telefonica, individually made us conclude that the likelihood of approval is very high,” Blok said as company shareholders voted to approve the transaction. “That is why we put it already to our shareholders, otherwise you wouldn’t do it.”

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