The European Commission has launched an investigation into the planned merger between BT and MCI. The $20 billion deal is already under scrutiny by antitrust authorities in the UK and US.
Investigations into pacts between telecomms operators are almost standard practice, but a probe into one of the world's biggest corporate marriages is likely to be involved and complex. The respective authorities may ask for concessions before giving the go-ahead, suggest industry analysts, although a total block on the merger is not anticipated.
Adrian May, a telecomms analyst at Ovum, said: ?Compared to the US investigators - [the US Federal Communications Commission, Justice Department and Committee on Foreign Investment] - the EC may not have so much to argue about. The UK is one of the most liberated of telecomms markets though BT still has an 80 per cent share. For the US, it is concerned that the its second largest telecomms operator is being taken over by a foreign company.?
BT would argue that, despite commanding the lion's share of the market in the UK, other suppliers are allowed to compete. However, the EC could demand concessions that offer stronger guarantees that the UK market is kept open, continued May. In addition, the US authorities could ask for greater US shareholding to balance ownership between the US and UK. In August, before the BT merger was announced, the US Justice Department gave permission for foreign ownership of MCI to be increased from 20 per cent to 35 per cent.
In its defence, BT may also point to Global One, a joint venture of France Telecom, Deutsche Telekom and US-based print, to which the EC gave the thumbs-up, although with anti-monopoly conditions. It can also refer to its existing close relationship with MCI. ?BT would ask what the fuss is about, since the EC gave the go-ahead to Concert, the joint venture between BT and MCI. The difference is that the new company would be slightly closer to its shareholders,? said May.
Though competitors, such as AT&T, have been aggressively vocal in their opposition to the merger, May does not believe they would put too much pressure on the EC and other authorities for fear of jeopardising their own future plans, which could include acquisitions and international joint ventures of their own.
The EC is expected to make a decision within a month or extend the investigations by four months. Investigations in the US could take up to a year.
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