RealTime IT News

WorldCom Appeals European Decision

[London, ENGLAND] Global communications company WorldCom said Thursday it has petitioned to overturn the European Commission's June 28 decision blocking its merger with Sprint.

WorldCom has lodged a petition with the European Court of First Instance in Luxembourg, asking the court to annul the EC's ruling on jurisdictional, substantive and procedural grounds.

WorldCom General Counsel Michael Salsbury said the Commission had fundamentally misperceived both how Internet services are provided and the highly competitive nature of the Internet marketplace.

"The implications of the Commission's decision for WorldCom, for our customers, and for the Internet industry as a whole compel us to file this appeal so that the decision does not become the basis for future Commission actions or initiatives," said Salsbury.

Supporting WorldCom's arguments are a number of well-known economists and industry experts, including Dr. Martin Cave, professor of economics at Brunel University, Graham Louth, of the European communications consultancy Analysys, Dr. Keith Ross, head of multimedia communications at Institut Eurocom in France, and Internet network architecture expert James McCabe.

Together, the outside experts and the legal counsel at WorldCom are presenting a powerful argument for the merger, while pointing out where they believe the Commission was in error.

Among the Commission's mistakes, according to WorldCom, was its use of analysis that failed to take account of significant changes in the market over the past two years. During this time, new entrants and new technologies have emerged -- and WorldCom argues that they combine to "restrain the ability of any competitor to exercise market power."

Apart from justifying the merger by denying it will create a monopoly, WorldCom has challenged the decision on procedural grounds. It claims the Commission improperly attributed revenue from the Global One venture to Sprint to satisfy the turnover threshold, and, as a consequence, the transaction lacked the requisite "Community dimension" for EC review.

In one of the dispute's more arcane maneuvers, WorldCom and Sprint withdrew their merger notification but the Commission still went ahead with its blocking decision. Observers have suggested that by withdrawing notification the two companies were simply trying to outwit the Commission on legal grounds -- as is now being tested.