The European Commission opened an in-depth investigation into whether TeliaSonera and Telenor should be allowed to merge their Danish operations, as the regulator’s policy towards in-market consolidation again comes under the spotlight.

The regulator has concerns that the merged entity would face insufficient competition from the only two remaining players. “This could lead to higher prices and less innovation,” it argued in a statement.

The Commission now has a deadline of 90 working days, until 19 August, to reach its decision.

The two operators announced plans to merge back in December, with the aim of creating a counterweight to market leader TDC. If successful, the merger would reduce the number of network operators in the country from four to three.

“The Commission therefore has concerns that the transaction could reduce the merged entity’s and its competitors’ incentives to compete, leading to higher prices, loss of innovative offers and lower quality on the Danish retail mobile telecommunications market,” it said.

In addition, the reduction in the number of network operators able to offer wholesale services could weaken the position of MVNOs in the Danish market.

The merger would also result in a “highly concentrated market structure with two large and symmetric operators at the retail and wholesale level”. The EC raised the concern of coordination between the remaining operators.

For their part, TeliaSonera and Telenor argued the merger will create a strong fixed and mobile competitor to the benefit of businesses and consumers, who will see improved connectivity, higher speeds and better performance across the whole country.

In addition, customers would see a larger distribution network and more user-friendly services. “We therefore remain confident that the merger will be approved during 2015,” they said.