Telefonica charged by EU over broken German merger promise

By Foo Yun Chee

BRUSSELS (Reuters) - Spanish telecoms operator Telefonica has failed to help rivals enter the German mobile market, breaking a promise made five years ago in return for regulatory approval of its E-Plus deal, EU antitrust regulators said on Friday.

European Competition Commissioner Margrethe Vestager has taken a tough line against companies breaching procedural rules or pledges and levied million-euro fines against companies including Facebook in recent years.

The European Commission on Friday said it had sent a statement of objections, or charge sheet, to Telefonica, giving the company until April 5 to respond.

Telefonica could be fined up to 10 percent of its German subsidiary's global turnover if found guilty of breaking its pledge.

The EU competition enforcer had waved through the 8.6 billion euro (7.5 billion pounds) E-Plus deal after Telefonica agreed to sell some radio spectrum and rent out capacity on its network to smaller rivals.

The company did what it had promised with one exception.

"The Commission's preliminary view is that Telefonica did not properly implement its obligations under the wholesale 4G access obligation," the EU executive said.

It said this restricted the ability of third parties to compete in the German mobile telephony market.

This is the first case where a company broke its merger pledge, the Commission said.

Telefonica said it had complied with its promise.

"We are confident that we can dispel the Commission's current concerns," the company said in a statement.

(Reporting by Foo Yun Chee; Additional reporting by Andres Gonzalez; Editing by David Goodman)