Justice Department OKs WorldCom’s Purchase of MCI; FCC Review Is Next
The Justice Department on Wednesday approved WorldCom Inc.’s acquisition of MCI Communications Corp. over the protests of some rivals and unions who fear the combination would stifle competition for Internet traffic and telephone service.
The department’s antitrust division approved the deal, originally valued at $37 billion, after long- distance giant MCI agreed to sell its Internet service for $1.75 billion to Britain’s Cable & Wireless. WorldCom, however, would retain UUNet Technologies Inc., one of the largest providers of Internet access.
Jackson, Miss.-based WorldCom and Washington-based MCI face just one more regulatory hurdle: a public interest review by the Federal Communications Commission. If the deal passes FCC muster, the companies will be able to consummate a transaction that will create the nation’s second-largest telephone company, after AT&T; Corp.
“We have fully addressed the antitrust concerns of the U.S. Department of Justice and look forward to gaining final regulatory approval from the Federal Communications Commission,” said MCI Chairman Bert Roberts. “We are eager to begin delivering the many benefits of the MCI-WorldCom merger--growth for our shareholders, innovation and value for our customers and new opportunities for our employees.”
Some experts had predicted that federal regulators would approve the deal because the combination might create new competition for the regional Bell telephone companies, which dominate local service.
Although WorldCom and MCI have touted the deal as a way to strengthen MCI’s efforts to enter the local market, some telephone rivals and union officials fear the deal could lead to less competition, not more.
“We still think this is a bad deal for consumers and is counter to the intent of the Telecommunications Act” of 1996, said Jeff Miller, a spokesman for the Communications Workers of America. The union group, which had lobbied the Justice Department to block the deal, said it will now carry its fight to the FCC.
