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.

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