The deal would reduce the number of telecoms network operators in Spain from four to three, the European Commission said in a statement, saying it feared a reduction in competition in fixed and mobile broadband services as well as in "multiple-play" bundles.
"This could lead to higher prices and lower quality of services for consumers," the EU executive said.
The Commission is also concerned that the new group may have the capacity to restrict access to the mobile and fixed network of virtual operators that do not have their own infrastructure, thereby reducing their ability to compete.
The French giant Orange and its Spanish competitor MasMovil, respectively the second and fourth largest operators in the country, had announced in July the project to merge their activities in Spain. The transaction is expected to create a "50-50" joint venture valued at €18.6 billion.
The objective of the two groups is to finalize the project in the second half of 2023 "at the latest", subject to approval by the competition authorities.
The transaction was notified on 13 February to the European Commission, the guardian of competition in the EU. After the opening of the full investigation, it now has 90 working days, until August 21, to issue its decision.
Orange and MasMovil justified the creation of their joint venture in particular by efficiency gains that would allow them "to accelerate investments in optical fiber and 5G".
The operation is part of a context where several leaders of European operators have called for the consolidation of the market on the continent to reduce competition and increase their profitability, at a time when they are investing heavily in these technologies.
The opening of the in-depth investigation "constitutes a further step in the process with the Commission, during which we will have the time and opportunity to demonstrate that this transaction is beneficial both for Spanish consumers and for the telecommunications sector, as it will ensure the sustainable deployment of 5G and fibre on a larger scale in a highly competitive market", responded a spokesman for Orange in a statement.
© 2023 AFP