2003/790/EC: Commission Decision of 28 June 2000 declaring a concentration incompatible with the common market and the EEA Agreement (Case COMP/M.1741 — MCI WorldCom/Sprint) (Text with EEA relevance.) (notified under document number C(2000) 1693)

• Articles: 3

Article 1

The notified concentration consisting of the merger between MCI WorldCom and Sprint is declared incompatible with the common market and the functioning of the EEA Agreement.

Article 2

This Decision is addressed to:

MCI WorldCom Inc. 1801 Pennsylvania Avenue

NW; Parkway

Washington, DC 20006 United States of America

Sprint Corporation 2330 Shawnee Mission

Westward

Kansas 66205 United States of America.

Done at Brussels, 28 June 2000.

For the Commission

Mario Monti

Member of the Commission

(1) OJ L 395, 30.12.1989, p. 1; corrigendum OJ L 257, 21.9.1990, p. 13.

(2) OJ L 180, 9.7.1997, p. 1; corrigendum OJ L 40, 13.2.1998, p. 17.

(3) OJ C 277, 18.11.2003.

(4) Turnover calculated in accordance with Article 5(1) of the Merger Regulation and the Commission Notice on the calculation of turnover (OJ C 66, 2.3.1998, p. 25). To the extent that figures include turnover for the period before 1 January 1999, they are calculated on the basis of average ECU exchange rates and translated into EUR on a one-for-one basis.

(5) Parts of this text have been edited to ensure that confidential information is not disclosed; those parts are enclosed in square brackets and marked with an asterisk.

(6) Sprint's turnover includes one third of Global One's turnover as it was one of the three controlling shareholders in this joint venture.

(7) Commission Notice on calculation of turnover (OJ C 66, 2.3.1998, p. 25, paragraph 27).

(8) Commission Regulation (EC) No 447/98 of 1 March 1998 on the notifications, time limits and hearings OJ L 61, 2.3.1998, p. 1.

(9) TeleGeography 2000, p. 106.

(10) [...]*.

(11) The connection goes through a modem port and ISPs are billed on usage basis. Major ISPs such as AOL, Earthlink, Mindspring, MNS and Prodigy buy wholesale dial-up.

(12) [...]*.

(13) [...]*.

(14) Cf. footnotes 11 and 12.

(15) [...]*.

(16) According to UUNet the following are the most important elements to consider when selecting a web-hosting provider: (a) the speed of access of the server, (b) redundant Internet connections (more than one connection that is high speed), (c) the website owner's control over its website, (d) server security, (e) bandwidth and connections to meet increased demand, (f) backup, (g) 24-hour server availability (h) the performance of the web servers used, (i) choice of encryption, (j) Internet experience of the provider, (k) knowledgeable sales and support staff, (l) monthly traffic report to provide feedback on the number of visitors to the website and (m) affordability - hosting the server in a data centre is cost-effective (according to UUNet up to one fourth the cost "of doing it yourself". UUNet's monthly hosting fee starts at USD 750 per month (see http://www.us.uu.net/products/ hosting/keystrengths/ selecting.html).

(17) "WorldCom plans European data center roll-out", Emily Bourne, Total Telecom, 31 May 2000.

(18) Case M.1069 (OJ L 116, 4.5.1999, p. 1).

(19) Application of Sprint Corporation and MCI WorldCom Inc., before the US Federal Communications Commission of 20 March 2000, p. 90, footnote 142.

(20) [...]*.

(21) Comments of Cable & Wireless to the US Federal Communication Commission (FCC) of 18 February 2000.

(22) [...]*.

(23) Joint response to statement of objections, paragraph 264 and footnote 235.

(24) The parties acknowledge that there are thousands of ISPs worldwide. See for instance page 119 of the reply to the statement of objections.

(25) Page 20 of the memorandum on the GCTS market submitted on 17 March 2000.

(26) Yankee Group report Executive Summary of "The Bell(e)s of the Ball Give Their Hands: Qwest/US WEST and Global Crossing/Frontier" taken from www.yankeegroup.com.

(27) IV/JV.15 - BT/AT& T of 30 March 1999.

(28) IV/M.1396 - AT & T/IBM Global Network.

(29) [...]*.

(30) TeleGeography 1999, The World's Top ISPs (winter 1998-99), p. 122; International Data Corporation, Internet Service Provider Market Review and Forecast, p. 17; Cahners In-Stat Group, Show Some Backbone: ISPs Report Increasing Demand and Shifting Vendor Preference, p. 7; Boardwatch, December 1999; Datamonitor, The Future of the Internet; Hearing on the MCI WorldCom-Sprint Merger Before the [US] Senate Committee on the Judiciary, Exhibit 3 (4 November 1999) (testimony of Tod A. Jacobs, Senior Telecommunications Analyst, Sanfor C. Bernstein & Co., Inc.), Bernstein Research, MCI WorldCom, March 1999, p. 51; OECD, Internet Traffic Exchange: Developments and Policy, DSTI/ICCP/TISP(98)1/FINAL, pp. 22 and 58-59.

(31) Credit Suisse First Boston, Morgan Stanley Dean Witter and Bear Stearns.

(32) Bell Atlantic has estimated the merged entity's market share at between 50 to 70 %, Cable & Wireless estimates MCI WorldCom's share of global Internet traffic at 50 % and Sprint's at 18 % in 1998.

(33) WorldCom: Still a Cool Company, Salomon Smith Barney, 7 February 2000, p. 2.

(34) These ratios are provided in ranges in order to protect the confidentiality of the information provided by third parties.

(35) Most of the information used to calculate market shares on the basis of revenue and traffic was provided by the notifying parties and third parties to the US Department of Justice in response to civil investigation demands through the granting of waivers of confidentiality to both competition agencies.

(36) This market share would amount to approximately [30 to 40]* % if assumptions extremely favourable to the parties were made.

(37) In 1998, the merged entity's combined market share was estimated at [45 to 55]* % ([35 to 45]* % for WorldCom and [5 to 15]* % for MCI) MCI's Internet business was later divested to Cable & Wireless.

(38) [...]*.

(39) [...]*.

(40) [...]*.

(41) [...]*.

(42) [...]*.

(43) John Sidgmore at Spring Internet World 2000, UUNet chair says industry concerned over capacity, Reuters, 4 April 2000.

(44) [...]*.

(45) [...]*.

(46) See recital 23.

(47) [...]*.

(48) John Sidgmore at Spring Internet World 2000, UUNet chair says industry concerned over capacity, Reuters 4 April 2000.

(49) The analogue audio signal must first be converted into a digital signal in order to be transmitted over the Internet. After being digitised, it is compressed and transmitted. The quality of the signal will depend on the number of bits used to encode it.

(50) Packet switching is the method used to move data around the Internet. In packet switching, all the data is broken up into smaller packages. Each package has the address of where it came from and where it is going. This enables the packages of data from many different sources to co-mingle on the same lines, and be sorted and directed to different routes along the way. This enables Internet connectivity providers (and their users) to use the same lines at the same time.

(51) [...]*.

(52) [...]*.

(53) [...]*.

(54) Sprint and MCI WorldCom's submission to the FCC, Reply to comments and petitions to deny application for consent to transfer control, 20 March 2000, pp. 89 et seq.

(55) [...]*.

(56) [...]*.

(57) [...]*.

(58) Since the completion of BT/AT & T, the WorldPartners alliance has effectively disappeared and Unisource has been merged into Infonet with AUCS.

(59) Form CO page 39

(60) Response dated 23 November 1998 to Commission request for information,

(61) I.e. BT/AT & T/Concert.

(62) [...]*.

(63) http://www.yankeegroup.com/ webfolder/yg21a.nsf/yankeetoday/ A+View+From+the+Top.+Our+ President+and+CEO,+Berge+Ayvazian+ discusses+the+proposed+merger+of+ MCI+WorldCom+and+Sprint.

(64) [...]*.

(65) I.e. Concert itself, together with its parent companies AT & T and BT.

(66) [...]*.

(67) [...]*.

(68) Global network services are defined as international network services (including voice and data (e.g. X.25, frame relay and ATM)), ancillary services (e.g. international 800, calling cards, etc.) and whole circuit IPLCs. The definition does not include professional services or customer premises equipment. For the purposes of the above definition, stand alone services such as international IDD, long-distance or local connections are included only if they are part of a larger bundle of global network services.

(69) As identified in the analysis of Global One in recitals 221 to 226, US presence is important for GTS suppliers because of the number of MNCs with headquarters there.

(70) Cases M.1383 Exxon/Mobil of 29 September 1999 and M.1628 TotalFina/Elf of 9 February 2000.

(71) [...]*.

(72) [...]*.

(73) [...]*.

(74) [...]*.

(75) [...]*.

(76) [...]*.

(77) Federal Trade Commission, A Study of the Commission's Divestiture Process (1999), www.ftc.go v/os/1999/9908/ind ex.htm

6.

(78) Keynote address at "Supercomm 2000" conference held in Atlanta on 7 June 2000.

(79) [...]*.

(80) [...]*.

Schedules & Appendices

ANNEX

UNDERTAKING SUBMITTED BY THE PARTIES ON 8 JUNE 2000 AND WITHDRAWN ON 27 JUNE 2000

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