The European Commission (EC) opened what it calls an “in-depth investigation” to assess whether Telefonica’s planned acquisition of E-Plus, KPN’s German business unit, is in step with EU Merger Regulation.

Europe’s anti-trust watchdog has previously expressed concern that the proposed transaction may harm mobile competition in Germany, combining as it does two of the country’s four mobile networks to create a player of similar size to the two largest operators – Deutsche Telekom and Vodafone Germany.

The commission is also troubled that the remaining operators, after the transaction, might have fewer incentives to grant access to their network to MVNOs and service providers.

Prospective and existing MVNOs and service providers would have less choice of host networks and hence weaker negotiating power to obtain favourable wholesale access terms.

Another concern is the reduction in the number of competitors might increase the likelihood that MNOs will coordinate their competitive behaviour and increase prices.

The commission says the inquiry will look into these matters, but stresses the outcome of the investigation is not pre-judged.

The watchdog has 90 working days, until 14 May 2014, to take a decision.