By John O'Donnell
BRUSSELS (Reuters) - The European Commission has rejected Germany's request to take the lead in regulatory scrutiny of Telefonica's
Germany's antitrust watchdog had on November 20 asked to be given the lead regulatory role in assessing a bid which will help shape its domestic telecoms sector.
But the EU's antitrust agency turned down that request, saying it was better placed to assess the deal because of its experience in assessing mobile telecoms mergers and the need for a consistent application of merger control rules across the EU.
The case could mark a watershed for the European telecoms industry, which is trying to consolidate but is wary of regulators demanding onerous concessions.
The EU watchdog said it would continue with its investigation of a deal which would reduce the number of mobile telecoms operators in Europe's biggest market from four to three.
The European Commission had announced on December 20 that it was opening an in-depth investigation of the deal, saying it may reduce competition in the German market. The Commission set a May 14 deadline for its decision.
Telefonica announced the bid in July, which will broadly put it on an equal footing with market leaders Deutsche Telekom
(Editing by David Holmes)