The European Commission has filed a statement of objections to the merger of Worldcom and MCI Communications, as part of its in-depth inquiry into the giant comms deal.
The EC hopes that this early listing of its concerns, over possible reduction of competition in supplying Internet backbone services, will help establish clearer definitions of the specific markets and possible remedies, a Commission source said.
"One of the problems is the difficulty of coming up with a system which is reliable to define what market share and power is," the source continued.
"The hearing (with the parties and other industry players) will be early in the day because we have been speeding up this case. We are looking forward to quite some work on establishing market presence and power," he continued.
The EC is looking at three measures of Internet backbone services market share - traffic; notional capacity on the transatlantic route; and the number of Internet service providers (ISPs) connected to the network.
On the traffic issue, the two parties combined would control 40-50 per cent of US Internet activities, split equally, with the next largest player having 10-15 per cent each.
On notional transatlantic capacity, the combined market share would be 23 per cent, second behind AT&T with 29 per cent.
In terms of ISP connections, MCI has 29 per cent market share and Worldcom 19 per cent, and even taking into account ISPs with connections to both backbones, the combined group would still have about 40 per cent share.
The EC takes 40 per cent as its threshold in deciding whether a firm has dominance in a market, though this is not a binding level, the source said.
The Commission is looking at worldwide markets in much of its analysis because those surfing the Internet from Europe will inevitably land on an Internet server based in the US.
But the EC source said that the body will not consider any divestments that may be required from the companies until it has finished its market analysis. He noted that finding "structural remedies" will be difficult anyway, given the "rocketing" rise in Worldcom's market presence.
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