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To: ANANT who wrote (2687)	6/19/1998 8:10:00 PM
From: Caxton Rhodes	Read Replies (1) \| Respond to of 11568

EU panel said positive on WorldCom, MCI merger (Releads with panel recommendation, details, background) By Amelia Torres BRUSSELS, June 19 (Reuters) - A key panel advised the European Union's antitrust watchdog on Friday to bless the $37 billion marriage between WorldCom Inc (WCOM - news) and MCI Communications Corp (MCIC - news), industry and antitrust lawyers said. The favorable recommendation came after intense talks between the two U.S. telecommunications firms and the European Commission, the EU's clearing house for mergers and acquisitions, which went right up to the start of the panel's meeting. The recommendation of the merger experts from the 15 EU states is conditional on the ironing out of remaining concerns over the merged entity's perceived control of the supply of Internet backbone services. The companies agreed to divest all of MCI's wholesale and retail Internet businesses, the sources said, a sale that analysts estimated could fetch about $1.1 billion. The conditions also include the transfer of MCI's residential and business Internet customer accounts to the buyer of the businesses, they said, to ensure effective competition. This required further clarification because MCI's Internet business was closely intertwined with its traditional phone business and many clients took both services. ''One of the core issues is that a number of customers take a bundle of services, one of which is the Internet...and it's not as simple as that to hand them over to the (buyer),'' the industry source said. The Commission was expected to iron out the details of the regulatory approval in the next few days, to enable MCI to make a public announcement on the sale. The highly-secretive panel met for four hours but members declined to comment on the outcome of their discussions. Commission spokesman Stefan Rating also kept mum. ''There were discussions with the Commission up to the last minute on a new proposal,'' a member of the advisory merger committee told Reuters. A Commission official came out of the meeting, which took place in the Commission's modern concrete conference center, with a one-inch thick file which said ''MCI - remedies.'' Remedies is EU jargon for the concessions, normally asset sales, companies must make to win merger approval. The Commission does not normally inform the public about the outcome of the advisory committee meetings and the committee members are instructed not to reveal their opinions. The only exception was the merger between Boeing and McDonnell Douglas a year ago where the Commission thought it better to inform the press due to the huge tension across the Atlantic over the European demands. Across the Atlantic, another industry source warned that the antitrust panel move was only a tentative blessing, saying that discussions continued over issues such as a stringent non-compete clause to prevent the backslide of customers. MCI also may be asked to divest its intranet and extranet business and other peripheral services such as managed firewalls, the source said. It was unclear whether WorldCom and MCI had already agreed to this. But sources familiar with EU merger proceedings were confident the deal would now go through in the 15-nation bloc. They also speculated that the same conditions could be imposed by the U.S. Justice Department which is also reviewing the merger and has been working closely with EU regulators. The Commission, which unlike the Justice Department is working under formal deadlines, has until July 15 to give its verdict, but wants to take the issue to its weekly meeting on July 8. It is still consulting with rival firms. MCI last month agreed to sell its wholesale Internet business to Cable & Wireless for $625 million, but regulators later said that divestiture was inadequate. The Commission would have preferred the two partners to sell WorldCom's prized UUNet Technologies because it is a stand-alone business and the Internet overlap would have been more easily eliminated. GTE Corp. (GTE - news) and Sprint Corp. (FON - news), two other U.S. telecoms companies, have been the most vocal opponents of the deal. European phone companies such as Belgium's Belgacom, British Telecommunications (quote from Yahoo! UK & Ireland: BT.L) and Deutsche Telekom (DTEG.F) have also expressed their views on the merger, other sources said.