Fu Yun Chi and Elvira Pollina
BRUSSELS/ROME (Reuters) – European Union competition authorities are asking competitors and clients whether an acquisition is proposed Telecom Italy US investment firm KKR’s fixed access network (BIT:) (TIM) could disrupt Italy’s wholesale market, people familiar with the situation said on Tuesday.
Such concerns from regulators could lead to a lengthy investigation into the deal and force KKR to offer significant legal remedies. Competitors have expressed risks of price increases after the deal is completed.
KKR is buying TIM’s domestic network for 22 billion euros ($23.5 billion) in a deal that will make the Italian telecoms group the first in a major European country to sell its fixed-line network.
TIM’s fixed-line network, or NetCo, covers nearly 89% of the country’s households, and its fiber and cables stretch 23 million kilometers (14.3 million miles) across the country. The sale is part of a government-backed plan to reduce debt and revive the group.
KKR last week sought EU antitrust approval for the deal, prompting the EU competition regulator on Monday to send out questionnaires to competitors and clients asking for feedback.
Respondents have until April 30 to respond to a 49-page document with 79 questions.
The document indicates that the European Commission is concerned about the viability of wholesale competition in Italy, the sources said.
The commission and KKR declined to comment.
The EU watchdog is also concerned that an agreement between the two companies would jeopardize competition in Italy, as well as market coordination risks between NetCo and rival OpenFiber, which is controlled by Italian state lender CDP and Australian investment group Macquarie, they said. .
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The questionnaire also asked about the impact of the deal on business users, the sources said. The Italian government plans to take a 20% stake in NetCo to control the asset, which is considered strategically important.
TIM said last week it was on track to complete the deal this summer. The commission plans to make a decision on the deal by May 30.
($1 = 0.9348 euros)