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To: Ruffian who wrote (12693)	6/21/2000 10:28:00 AM
From: Eric L	Read Replies (2) \| Respond to of 13582

<< EU will "not necessarily" block WorldCom/Sprint >> Counterpoint >> EU Set To Block WorldCom-Sprint Merger Reuters staff 21 June 2000 European Union officials plan to block the merger of WorldCom Inc. and Sprint Corp. after having concluded that the $115 billion telecoms deal would put too much of the Internet within a single firm's network, The Washington Post reported on Wednesday. The newspaper quoted EU officials as saying that the decision was likely to be formally adopted at the European Commission's July 5 meeting, apparently dealing a death blow to the giant merger, which has sparked concern on both sides of the Atlantic. "It's over," the Post quoted a senior official of the Competition Directorate General, which has been reviewing the proposed merger, as saying. "This deal is finished. Possibly, the parties will withdraw." EU Competition Commissioner Mario Monti has determined that the commission should block the deal outright and reject as insufficient the companies' proposal to sell Sprint's Internet business to alleviate regulators' concerns, the Post said, citing officials with direct knowledge of the case. Monti is due to arrive in Washington on Wednesday and is expected to brief U.S. officials on his decision. Officials told the Post that the U.S. Justice Department had been informed of their intent and was in accord with their analysis. The full commission could theoretically reject the antitrust recommendation, but the Post quoted officials as saying that was virtually unthinkable. In addition, recent rule changes effectively preclude the companies from altering their proposal to make it more palatable this deep into the process. WorldCom and Sprint officials declined to comment on Tuesday, according to the Post account, which carried a Brussels dateline. Justice Department officials were not immediately available to comment on the Post report. "GATEKEEPER EFFECT" CITED Monti earlier this month warned the U.S. telecoms giants about potential competition problems surrounding the deal, citing concerns about the potential "gatekeeper effect" of the merger on the Internet backbone. "If it came to be controlled by one firm, innovation and competition might be jeopardised," Monti told the European Business Summit in Brussels on June 10. The commission launched an extended four-month probe into the $115 billion deal on Feb. 21 and sent the companies a detailed list of its antitrust concerns on May 3. It must decide by July 12 whether to block the merger or clear it with conditions. The companies have said they are prepared to sell Sprint's Internet backbone business but will not consider selling WorldCom's stand-alone unit, UUNET. The Commission has said the merged group would control most of the Internet backbone - the basic infrastructure that users need to gain access to the World Wide Web - along with GTE Corp. and Cable & Wireless . European approval is necessary for the merger to proceed because WorldCom has substantial assets in Europe that could not be easily divided from the rest of its global enterprise. Monti's trip to the United States, planned months ago, is unrelated to the merger, officials said. He is to meet on Thursday with U.S. Trade Representative Charlene Barshefsky and, separately, with Senate antitrust subcommittee leaders. On Friday, Monti is scheduled to meet Justice Department antitrust chief Joel Klein, Federal Trade Commission Chairman Robert Pitofsky and Attorney General Janet Reno. On Monday, he is due to meet with the Federal Communications Commission Chairman William Kennard. << - Eric -