The European Commission may take legal action against the German telecoms regulator over concerns its planned auction of digital frequency licenses may harm competition, the commission's telecoms spokesman Martin Selmayr said Tuesday.

The commission "is deeply concerned" about the Bundesnetzagentur's decision to ignore the commission's advice on how to ensure fair competition in allocating digital frequency in Germany, Selmayr said.

If the commission finds European Union laws aren't respected by the German plan it "will not shy away from enforcing the E.U.'s competition and single market rules in this important context," Selmayr added.

The German regulator plans a second-quarter 2010 auction of licenses for frequencies to supply rural areas with mobile Internet access. New entrants to the market E-Plus and 02 have both complained the planned auction will benefit the incumbent mobile operators, the commission said.

Under E.U. law national regulators have to allocate radio frequencies for mobile services in an objective and transparent way. They shouldn't try to freeze the competitive situation on the market for the benefit of incumbent operators.

The commission takes issue with the regulator's argument that how the digital frequencies are divided "is outside the scope of the E.U.'s competence," Selmayr said.

-By Peppi Kiviniemi, Dow Jones Newswires; +3227411483; peppi.kiviniemi@dowjones.com