European Commission Conditionally Clears WorldCom MCI Merger
(July 9, 1998) The European Commission announced Wednesday that it has given conditional clearance to the merger between WorldCom and MCI, subject to a divestiture of MCI's Internet business activities.
The European Commission stated in a press release that:
"The Commission's investigations found significant overlaps in this market for 'top level' or universal Internet connectivity. WorldCom is currently the leading player in the market, with MCI one of its main competitors. The merger would have given the combined entity a market share of some 50% of the relevant market. The parties have committed to divesting MCI's Internet assets, thus eliminating the overlap with WorldCom's Internet business."
MCI and WorldCom announced last fall plans to merge, and shareholders have since approved the deal. However, the proposed merger needs the approval of several government regulators, including the Antitrust Division of the U.S. Department of Justice, the Federal Communications Commission, and the Competition Directorate of the European Commission.
On May 28 MCI announced that it would sell some of its Internet assets to Cable & Wireless. However, the Commission was unimpressed with that divestiture.
"After offering a limited assets sale which the Commission judged insufficient, the parties proposed remedies which involved the divestiture of a package including all of MCI's Internet interests, sufficient to enable the acquirer to take over the position of MCI as a player in this market," wrote the European Commission.
The merger is also opposed by telecommunications competitor GTE. It filed an antitrust suit in federal
district court in Washington DC in May seeking to enjoin the merger of WorldCom and MCI,
claiming that it would create a monopoly in the national market for Internet backbone
service in violation of § 7 of the Clayton Act.
Related Websites:
Related Pages in Tech Law Journal Website: