The European Union’s (EU) top competition authority has sent a formal complaint to Telefónica over its €8.6bn deal for Royal KPN’s German mobile unit E-Plus.
The regulators have concerns the takeover would hike mobile prices by up to a third for some customers, affecting competition in mobile virtual network sector.
EC’s spokesman for competition policy Antoine Colombani said: "I can confirm that the Commission on Wednesday sent a statement of objections related to the proposed acquisition of E-Plus by Telefonica Deutschland.
Telefónica spokesman told the Wall Street Journal that the company remains optimistic that it will be able to convince the authorities to approve the deal.
"As a combined entity we would be better placed to challenge the market leaders in Germany with attractive products and prices."
Announced in July 2013, the deal would develop into Germany’s largest wireless carrier, creating a unit similar to the German units of Deutsche Telekom and Vodafone.
The merger would also bring down the number of operators in the European country four to three, with Telefónica and E-Plus gaining command over most of the spectrum, which allows them to boost the amount of calls and data traffic.
