European Commission said the planned $20.3 billion merger between Orange and MasMovil in Spain could potentially lead to reduced competition and higher prices.
In order to gain approval for the deal, the telecom operators might need to offer significant concessions, Reuters news report said.
The merger, announced in July 2022, is based on an enterprise value of 18.6 billion euros ($20.3 billion) and involves Orange, the second largest telecom provider in Spain, and MasMovil, which holds the fourth position.
The concerns raised by the EU competition enforcer highlight the potential negative impact of reducing the number of network operators from four to three, as Orange and MasMovil currently compete with Telefonica and Vodafone in Spain.
European Commission in its press statement expressed worries that such consolidation could eliminate a crucial competitive force and innovative rival in the Spanish retail markets for mobile telecom services, fixed internet services, and bundled offerings.
The EU executive emphasized the likelihood of significant price increases for retail customers resulting from the merger. Despite potential cost savings, the Commission believes that the predicted anti-competitive effects would be substantial, considering the importance of competition in driving investment and service quality in the Spanish market.
Orange has pledged to continue demonstrating to the Commission the benefits of the merger, including improved services and increased investments in 5G and fiber optics in Spain. The companies involved can request a closed hearing to present their case before the EU enforcer makes a decision on the deal by September 4th.