Justice Clears British Telecom Purchase of MCI
The Justice Department on Monday gave British Telecommunications permission to buy MCI Communications Corp., in a $24-billion deal that would be one of the biggest foreign takeovers of a U.S. company.
But the department attached conditions to the deal about two months after European regulators took similar steps to help ensure competition.
The deal now awaits a ruling by the Federal Communications Commission, whose officials have said they hope to complete their work by summer’s end.
Shareholders of both companies have already approved the deal.
“MCI and BT remain confident that the merger can be completed as expected by fall,” the companies said in a statement, adding they are “very pleased the Department of Justice has completed its review.”
The new, combined company--to be called Concert--would have annual revenue of $43 billion from operations in 72 countries.
British Telecommunications already owns 20% of MCI, the nation’s second-largest long-distance company, a stake acquired in 1994 after U.S. regulators placed conditions on the transfer in a court consent decree.
The Justice Department said it will extend that decree, due to expire in 1999, to 2004, and it added more conditions.
“We need to make certain changes to the consent decree and extend it to ensure that U.S. consumers continue to enjoy the lower prices and better service associated with competition on international routes,” said Joel Klein, acting assistant attorney general in charge of the antitrust division.
The companies said they believed the merger would foster competition--citing, for example, a 12-cent-a-minute rate MCI initiated for calls between the United States and Britain.
The new corporate parent will absorb MCI, moving the headquarters to London. MCI is based in Washington.
MCI shares rose 62.5 cents to close at $43 in Nasdaq trading, while American depositary receipts of BT rose $1 to close at $82.50.
MCI led the way in breaking up the monopoly once enjoyed by AT&T; Corp., first offering competitive long-distance service for homes in 1980. It first expanded to international phone markets in 1982.
AT&T; was broken up by court decree in 1984.
Under the conditions for the merger set by the European Union, MCI will have to take additional steps to share its undersea cables with competitors.
The Justice Department, building on the work of the EU, also required that the British arm of the new company keep secret from its American counterpart any proprietary information it receives from U.S. telecommunications carriers.
The consent decree also gives the department access to documents within the new company and access to its personnel, so it can assure the new company lives up to its end of the agreement.
