Clinton, Miss., September 28, 2000 -- WorldCom has petitioned the
European Court of First Instance in Luxembourg to annul the European
Commission's June 28 decision blocking WorldCom's merger with
Sprint. In its petition, WorldCom asked the Court to annul the
decision on jurisdictional, substantive and procedural grounds.
"The Commission fundamentally misperceived both how Internet
services are provided and the highly competitive nature of the
Internet marketplace," said Michael Salsbury, WorldCom General
Counsel. "The implications of the Commission's decision for
WorldCom, for our customers, and for the Internet industry as a whole
compel us to file this appeal so that the decision does not become
the basis for future Commission actions or initiatives."
Internationally recognized economists, as well as eminent
technical and industry experts, supported WorldCom's submission.
Along with the filing, WorldCom submitted statements by Dr. Martin
Cave, Professor of Economics at Brunel University and a member of the
UK Competition Commission; Graham Louth, a Principal Consultant with
Analysys, Europe's leading communications consultancy; Dr. Keith
Ross, Chairman of the Multimedia Communications Department at
Institut Eurocom in France; and engineer James McCabe, an expert on
Internet network architecture, traffic flows and service quality.
In the filing, WorldCom seeks to demonstrate that, in reviewing
the transaction, the EC made several material errors in its analysis
of the effect a combined WorldCom-Sprint could have on the Internet
market. These included:
- Relying on market share estimates for a combined
WorldCom-Sprint that did not demonstrate market dominance; - Using an analysis that did not account for significant changes
in the market over the past two years, including the emergence of
many new entrants as well as new technologies that restrain the
ability of any competitor to exercise market power; and - Defining the relevant market artificially by considering
peering relationships alone rather than applying a supply- and
demand-side analysis.
WorldCom also argued that the decision is procedurally defective
in a number of respects. The transaction lacked the requisite
'Community dimension' for EC review because the Commission improperly
attributed revenue from the Global One venture to Sprint to satisfy
the turnover threshold. Further, the Commission issued its decision
despite the fact that WorldCom and Sprint had formally withdrawn
their merger notification.
Finally, the review process was conducted in a manner that
adversely affected the parties' right of defense.
"While both WorldCom and Sprint have moved on to pursue
separate strategies, it is important that the European
Commission's decision be reviewed and annulled, given its
potential impact upon the development of dynamic European and global
markets for telecommunications and Internet connectivity,"
Salsbury said. "We firmly believe that the Court of First
Instance will agree."
WorldCom (NASDAQ: WCOM) is a global leader in
"all-distance" communications services with operations in
more than 65 countries. Revenues in 1999 were $37 billion, with more
than $15 billion from high-growth data, Internet and international
services. WorldCom provides facilities-based and fully integrated
services to facilitate e-business and e-commerce in the digital
generation. For more information go to http://www.wcom.com.
