Full Ec Probe Into Bt-Mci Pact Likely

The European Commission is expected to launch a full investigation into the alliance between British Telecommunications Plc and MCI of the United States later this week, sources said on Wednesday.

There is every chance that the deal will go into the second phase (of investigation), a Commission official told Reuters declining to give any details.

The planned $20 billion merger between the two telecommunications giants was submitted to the Commission for clearance in December under the EUs merger rules which ban creation or strengthening of dominant positions.

The Commission has until Thursday to decide whether to clear it after its preliminary inquiry or launch an in-depth probe if it is worried about the impact on fair competition in Europe. This could last up to four months.

 

BTs Brussels office was not aware of the Commissions decision, but expressed little surprise at the prospect of a thorough investigation into its agreement with MCI.

We are not picking up any negative vibes about the merger...but there may be some nervousness because it is just so big, BTs EU affairs official Mike Corkerry told Reuters.

The Commission has in the past started full probes into megamergers mainly because it needed more time to assess them. This happened last year to the alliance between Sandoz and Ciba-Geigy which finally went through unscathed.

Corkerry was optimistic the deal would be ultimately cleared in the EU as well as the United States because Britain has one of the most liberalised telecoms markets.

This aspect has been acknowledged by European Competition Commissioner Karel Van Miert. However, the deal has faced strong opposition particularly from AT&T, something the Commission cannot ignore, the sources said.

The Commission has competence over all large mergers and acquisitions which involve companies with a combined worldwide turnover of at least five billion European currency units ($5.8 billion) and a European turnover of 250 million ecus (293 million) each.

BT and MCI announced in November they were pooling their operations into their existing joint venture Concert. The deal also involves BT taking control of the American company in which it already has a 20-percent stake.

BT and MCI are hoping to conclude their alliance this fall after having cleared all regulatory hurdles.