The European Commission (EC) has launched a four-month long antitrust investigation into the proposed merger of telecoms giants MCI WorldCom and Sprint.
The move follows fears that the new company could dominate internet access in Europe and goes beyond the standard one-month review that is due to end on Wednesday.
The investigation will also focus on how the two companies plan to provide global telecoms services to multinational companies and how the deal would affect the US and European voice-based telephony market.
The fear is that the merged company, in tandem with the Concert joint venture between BT and AT&T, may end up controlling the majority of the market for providing global telecoms services to multinationals.
The EC also wants to examine whether the merger would lead to the market for international voice telephony services between the US and Europe being dominated by MCI WorldCom/Sprint and AT&T.
The body now expects to make a final decision on the proposed $129bn merger by early July and will also co-operate closely with the US Department of Justice during the investigation.
"The Commission has raised serious doubts as to the compatibility of the proposed merger between MCI WorldCom and Sprint, mainly because of its impact on competition on the market for top-level internet connectivity," said the EC's antitrust authority in a statement.
Sprint's sale of its stake in the Global One joint venture between France Telecom and Deutsche Telekom does not go far enough to allay antitrust worries because of the "negligible involvement" of Global One in the European Internet access market, added the authority.
As a result, market watchers believe that regulators may ask for the sale of either MCI WorldCom's UUNet ISP unit or Sprint's equivalent business because there are only a handful of global players in this market.
The companies have already said that they would be willing to divest the Sprint business to ensure the deal gets the go ahead, but MCI WorldCom has made it clear it will not sell UUNet.
The two said in a joint statement on Monday: "The companies remain confident that the Commission will approve the transaction and expect it to be completed on schedule in the second half of 2000."
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