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EC eyes WorldCom-MCI deal

The European Commission receives "several" complaints about the proposed telecommunications merger.

The European Commission has received "several" complaints about the proposed merger between WorldCom (WCOM) and MCI Communications (MCIC), competition commissioner Karel Van Miert told Bloomberg today.

"We are examining whether the merger raises serious competition concerns relating to the companies' Internet activities," Van Miert was quoted as saying. "Competitors have been complaining about certain aspects so the commission will look into these complaints."

In order to be competitive in today's environment, so-called Internet backbone providers--whose high-capacity networks carry the bulk of Internet traffic--must link their systems so they can offer their customers ubiquitous service. Competitors--including Sprint, GTE, and PSINet--have warned that the $37 billion merger could disrupt this delicate interdependence, which they say has allowed the Net to thrive.

Even though both WorldCom and MCI are located in the United States, the European Commission has authority to oversee mergers that affect markets in the 15-nation group. The merger also is receiving attention from the U.S. Justice Department and the Federal Communications Commission.

While antitrust regulators have a wealth of experience in analyzing traditional industries, markets centered around the Internet pose new challenges. As previously reported, the Justice Department is attempting to climb the steep learning curve by sending backbone providers civil subpoenas that seek detailed information about the amount of traffic passing over their networks.

The EC appears to be in a similar position, although a step ahead of the DOJ's efforts. At a press conference in Brussels, Belgium, Van Miert called his investigation of the merger "a learning process."