Competition: Commission clears WorldCom and MCI merger subject to conditions

The Commission has approved the supplementary aid granted by France to Crédit Lyonnais in addition to the aid already authorised in 1995 and 1996. The aid is approved on condition that Crédit Lyonnais reduces its balance sheet in Europe and world-wide, over and above the reductions imposed on the bank in 1995, i.e. a total reduction in its balance sheet of more than a third since 31 December 1994. Also, the bank will have to reduce the number of its branches in France, while the French government has committed itself to privatise the bank by October 1999. After privatisation, the bank's expansion will remain limited to 3.2% per year up to 2001 and it will have to distribute 58% of its net surplus in the form of dividends until the year 2003.

Commission clears WorldCom and MCI merger subject to conditions

The Commission has given conditional clearance to a merger between WorldCom Inc and MCI Communications Corporation (MCI). WorldCom and MCI are both publicly-quoted telecommunications companies offering the normal range of telecommunications services. Both are among a small group of Internet Service Providers (ISPs) who can provide internet "connectivity" anywhere on the internet solely through their own peering agreements (i.e. agreements with other network operators for mutual termination of traffic). Such internet access services are provided both to directly connected customers and to intermediate ISPs who resell the connectivity to other buyers or to final users.

The Commission found significant overlaps in this market for "top-level" or universal internet connectivity. WorldCom is currently the leading player in the market, with MCI one of its main competitors. The merger would have given the combined entity a market share of some 50% of the relevant market, and allowed it to behave independently of its competitors. The Commission considered that the merger would have created a dominant position on the market for internet connectivity services, and therefore decided that approval of the merger must be subject to certain conditions.

The parties have committed, as a condition of the approval, to divesting MCI's internet assets, thus eliminating the overlap with WorldCom's internet business. The two competition authorities must approve the proposed buyer of the divested activities. The timetable for divestiture allows the companies the opportunity to agree a sale in advance of, but conditional on, the merger.