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European Commission launches probe into T-Mobile, Tele2 Netherlands deal

The European Commission has launched an in-depth probe into T-Mobile Netherlands' proposed acquisition of Tele2 AB unit Tele2 Netherlands.

The commission raised concerns that the planned merger would reduce the number of mobile network operators in the Netherlands, resulting in higher prices for mobile services as well as less choice and innovation for mobile customers.

The EC also noted that the merger may weaken competition among operators, leading them to coordinate their competitive behavior. It further said mobile virtual network operators may eventually find it more difficult to secure "favorable" wholesale access from mobile operators following the transaction.

The commission, which was notified of the deal May 2, has until Oct. 17 to make its decision.

In December 2017, Deutsche Telekom AG struck a cash-and-stock deal that would enable T-Mobile Netherlands to acquire Tele2 Netherlands. Under the deal, Tele2 will get €190 million and a 25% stake in the merged company. Deutsche Telekom will hold the remaining 75% and infuse capital into the merged entity via a €1.1 billion intercompany loan.

The transaction is expected to be completed in the second half, subject to approval by relevant antitrust regulators. Tele2 will get a €25 million break fee in case the deal failed to secure clearance.

The Netherlands Authority for Consumers and Markets recently said it will work with the European Commission in assessing the merger by carrying out market research to generate relevant input for the assessment.