Telefonica under investigation after being accused of breaking EU merger rules

Telecoms operator Telefonica made promises five years ago to help rivals to enter the marketplace in Germany. This was part of an agreement with the Commission; and in return, it would be given approval for E-Plus.

However, in a landmark case, the Commission has revoked this agreement, as the firm has failed to uphold its side of the deal. This is the first step towards a formal investigation, as the Commission has pointed out, the company has broken the pledge it made during the merger process.

The Commission allowed the initial deal, which was word over 8 billion euros, in 2014. This allowed Telefonica to go ahead with the E-Plus deal, on the basis that it agreed to rent out some of its network to smaller rivals to allow for fair competition.

In a statement released last week, commissioner for Competition, Margrethe Vestager said: “We need full compliance and take very seriously any case where companies may have failed to comply with their commitments, which is why we have sent today’s statement of objections.

“The Commission’s preliminary view is that Telefonica did not properly implement its obligations under the wholesale 4G access obligation.”

The ability for other companies to compete in the market in Germany has been severely restricted due to the fact that, according to the Commission, Telefonica has failed to comply with the promises it made.

However, Telefonica said in a statement: “We are confident that we can dispel the Commission’s current concerns.” The firm says that it has met its promises. But, due to the Commission’s investigation process, it must now go through a statement of objections and has until April 5th to respond.

If Telefonica is found guilty of breaking the conditions of the deal, it could be fined up to 10% of its turnover in Germany. Whether it’s found guilty or not will depend on the details of the case and how it chooses to defend itself.