Brussels: The European Commission on Wednesday cleared the acquisition of E-plus in Germany, a unit of Dutch KPN, to Telefonica of Spain, but subject to conditions over competition concerns.
"The remedies to which Telefonica commits ensure that the acquisition of E-Plus will not harm competition in the German telecoms markets," EU Competition Commissioner Joaquin Almunia said.
The acquisition, estimated at 8.5 billion euros ($11.6 billion) in cash and a 20.5 percent stake in Telefonica Deutschland, merges Germany`s third and fourth-biggest operators, leaving only Deutsche Telekom and Vodafone as similar-sized rivals.
The commission said the tie-up "as initially notified, would have removed two close competitors and important competitive forces from the German mobile telecommunications market".
To meet those concerns, Telefonica has offered several concessions.
Telefonica has already announced that it will cede 30 percent of its total network capacity to small rivals without their own infrastructure, known as Mobile Virtual Network Operators, at a fixed price.
The company also promised to sell spectrum space and other assets, to expand existing network deals with competitors, and to sell any future 4G network capacity at a fair price.
Meanwhile in Paris, Orange signalled that it would not bid for Bouygues Telecom.
The announcement pushed French telecom shares down sharply because it clouded the short-term prospects for consolidation of the French mobile telecom sector within the changes in the wider European industry.