GTE gives cautious welcome to alliance

Mergers WorldCom/MCI union prompts threat of legal action.

GTE has welcomed the European Commission's conditional approval of the WorldCom/MCI Communications alliance, but has promised legal action against the threat of anti-competitive behaviour by the merged companies in the future.

The Commission's approval of the merger is subject to MCI selling its internet backbone interests but GTE, whose complaint sparked the EC antitrust investigation, expressed concerns that WorldCom/MCI could soon win back MCI's divested share of the internet market.

A representative for GTE said: 'It is critical that safeguards are in place to prevent a combined World Com/MCI from capturing back the internet customers who currently buy services from MCI. GTE is committed to working with the European Commission and the US Department of Justice (DoJ) to achieve that result.

'Until GTE is satisfied the necessary safeguards are in place, it will continue to pursue the internet claims,' he said.

Earlier, European competition commissioner Karel Van Miert said the approval of the planned merger was subject to a number of conditions. One was a 'non-compete' clause, which would prevent the two companies from immediately regaining the market share given up by MCI.

However, Van Miert refused to provide any details on the length or the exact constraints of the clause.

He added the decision hinged on MCI completely divesting its internet activities. 'We have always said we wanted to eliminate the overlap in top level internet connectivity because that was where there was a threat to competition,' he said.

Van Miert added: 'If the overlap is removed, the concerns that prompted the investigation are also removed.'

Responding to a question on why it is MCI and not the market leader WorldCom that is selling its internet business, an EC representative said: 'It was always left to them to decide who would sell what - that is a commercial decision for the two companies to decide. In many ways, they have chosen the more complicated sale,' he commented.

On the contentious subject of WorldCom/MCI's potential share of the internet backbone, which the Commission estimated to be 50 per cent, the representative said the Commission had cooperated with the US Department of Justice to find a formula for measuring market share.

'We have worked very closely with the DoJ on this because it is the first time anybody has had to really look at this market.

'Our figure was a weighted average of three criteria: traffic flow, turnover and potential capacity,' he said.