U.S. Justice Department, EU Agree on WorldCom-MCI Remedies
Bloomberg News
June 30, 1998, 5:34 p.m. ET
U.S. Justice Department, EU Agree on WorldCom-MCI Remedies
Washington, June 30 (Bloomberg) -- A key condition that
European regulators are imposing to clear the way for WorldCom
Inc.'s $43.9 billion purchase of MCI Communications Corp. won
support from the chief U.S. antitrust enforcer.
U.S. Justice Department antitrust chief Joel Klein said,
like the Europeans, he also wants assurances WorldCom won't win
back MCI customers once MCI sells its Internet infrastructure to
win clearance for the proposed combination.
The European Union conditionally approved the transaction on
June 22 after MCI agreed to sell off its entire Internet business
and guaranteed the new, combined company won't try to win back
MCI's former Internet customers for a period of time. Final EU
approval is expected July 8.
Klein expressed support today for the EU approach.
''Because (customers) have ongoing long-term relationships,
they're going to turn around and go right back,'' Klein said
after speaking at a Washington luncheon. ''What have you
accomplished? What is the purpose of the remedy then? Normally,
when you have a divestiture, the customer goes with the new
company. That's the issue the EU is concerned about, and that
doesn't seem like a trivial issue.''
The Justice Department is conducting its own antitrust
review of the proposed combination, working closely with its
European counterparts. Klein declined to say when the Justice
Department would announce its decision.
MCI declined to comment on Klein's remarks.
MCI and WorldCom expect to complete the purchase this
summer. The transaction also requires approval of the U.S.
Federal Communications Commission.
The combination, creating the second-largest U.S. phone
company behind AT&T Corp., would control about 25 percent of the
$70 billion-a-year U.S. long distance market and offer local
services in more than 100 cities.
The FCC and the Justice Department also must decide whether
the combination would reduce competition for wholesale long
distance. WorldCom is the largest U.S. provider of wholesale long-
distance capacity to resellers like GTE Corp., which sell the
services under their own brand names. Critics of the combination
argue that it would reduce WorldCom's incentive to sell wholesale
long-distance at competitively low prices.
--Anne Marie Squeo in Washington at 202-624-1862 /jhr |
