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States to aid MCI-WorldCom probe

State attorneys offer to help in the Department of Justice's ongoing investigation of the proposed WorldCom-MCI merger.

State attorneys general today argued that the proposed merger between WorldCom (WCOM) and MCI (MCIC) could have the potential to exert "market dominance over the Internet," and offered to help in the U.S. Department of Justice's ongoing investigation of the proposed deal.

State Attorneys General Charlie Condon of South Carolina and Mark Earley of Virginia offered to assist, and called on other attorneys general to join their efforts. Their offers come as state attorney generals and the DOJ are teaming up in the ongoing antitrust investigation of Microsoft, a collaboration that suggests that, as the information technology business grows, regulators and consumers alike worry about market dominance by any one player.

As previously reported, the DOJ already is looking into the potential of MCI and WorldCom to dominate the Net with their backbones--among the largest in existence--and has issued civil subpoenas. CNET's NEWS.COM reported the concerns being raised by this deal in the Internet backbone business last September.

"As the Internet grows and becomes part of everyday life and commerce, it must remain competitive," Condon said in a statement. "Any person in my state who sits at a computer terminal wants assurance that this merger will not reduce consumer choice or competition in the Internet marketplace."

Added Earley: "The Virginia attorney general's office is concerned by the potentially far-reaching ramifications and the significant antitrust implications raised by the proposed merger. A thorough examination of this proposed merger would seem to be in order."

Both attorneys general also expressed concern about the merger's impact on the long-distance market.

MCI and WorldCom, for their part, deny that the merger will create any antitrust issues. They remain confident that their proposed combination will win regulatory approval by midyear.

Shareholders of both companies approved the buyout yesterday, and a 17-member board was proposed for the combined company.