The European Commission launched an in-depth investigation Wednesday into Dutch satellite navigation device maker TomTom's plans to take over Dutch digital mapmaker Tele Atlas, expressing "serious doubts" about the deal's impact on competition in the booming satellite navigation market.
While many companies make portable navigation devices, Tele Atlas is one of only two makers of digital maps that offer complete coverage of Europe. The other is the U.S. firm, Navteq. Because there are only two such companies, "the proposed acquisition raises vertical competition concerns," the Commission said in a statement.
The probe will examine whether the deal would push up the price of digital maps for rival portable navigation device makers or limit their access to these maps, the Commission said. It set an April 17 deadline for the probe to end.
TomTom and Tele Atlas said in a joint statement they expect to have a clearer idea about whether the deal can go through by early next year. TomTom extended its offer for Tele Atlas shares until March 31, assuming it would know the outcome of the probe by then.
The market for satellite navigation devices, which has emerged over the past five years, is undergoing rapid consolidation.
One of TomTom's biggest rivals, US-based Garmin, also tried to acquire Tele Atlas but withdrew its offer after being outbid by TomTom last month. Also last month, Finnish mobile phone operator Nokia announced plans to buy Navteq.
Garmin, meanwhile, has struck a deal with Navteq, giving the device maker access to Navteq's maps until 2015.