Competition Policy and Market Regulation 'M1069 WORLDCOM/MCI'

Mico, Apostolov (2006): Competition Policy and Market Regulation 'M1069 WORLDCOM/MCI'. Published in: TELECOMMUNICATIONS: REGULATORY CONCERNS, Chapter 8, pp. 163-179, Amicus™ Books - Institute of Chartered Financial Analysts of India (ICFAI) University Press, India, 2010

Abstract

Nowadays high profile merger cases are becoming quite important and are taken as milestones of legal systems that produce the needed juridical backbone of the evolution of the market regulation. Additionally such cases are equally important for the progress of the economic theory in the domain of competition analysis and policies. This study will give outlook of the decisions made by the European Commission, as well as, the US Department of Justice in the merger case of two telecommunication corporations- WorldCom and MCI. This case was one of the most important cases that determined the future development of the telecommunication and Internet industry worldwide. The main point of the case analysis is to consider the competitive effects produced by such possible merger and the possible solutions in case of anticompetitive outcomes. The methodology used while writing the essay is based on two major parts: I) analytical part that takes most of the analyses and II) theoretical part. The first part is comprised of the analyses of the US Department of Justice and especially Federal Communications Commission that has the authority for such cases, as well as, the profound opinion and conclusions of the European Commission (DG Competition) of one questionable segment of the telecommunications market, the Internet market, that creates anticompetitive effects. The second part will give the predominant theoretical concepts used by the antitrust authorities.

• Item Type: MPRA Paper
• Language: English
• Keywords: WorldCom, MCI, merger, European Commission, DoJ
• Subjects: L - Industrial Organization > L5 - Regulation and Industrial Policy > L51 - Economics of Regulation; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O51 - U.S. ; Canada; G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers ; Acquisitions ; Restructuring ; Corporate Governance; D - Microeconomics > D4 - Market Structure, Pricing, and Design > D43 - Oligopoly and Other Forms of Market Imperfection; O - Economic Development, Innovation, Technological Change, and Growth > O5 - Economywide Country Studies > O52 - Europe; L - Industrial Organization > L1 - Market Structure, Firm Strategy, and Market Performance > L12 - Monopoly ; Monopolization Strategies; L - Industrial Organization > L8 - Industry Studies: Services > L86 - Information and Internet Services ; Computer Software

References

References

Mico Apostolov, 'M1069 WORLDCOM/MCI", College of Europe

Béatrice DUMONT and Peter HOLMES, Competition Policy and Market Regulation, College of Europe, winter 2005-2006.

BUIGUES, P.A. & REY, P., The Economics of Antitrust and Regulation in Telecommunications : Perspectives for the New Regulatory Framework, (2004).

COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 - WorldCom/MCI), p.2. Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600 en.pdf

Council Regulation (EEC) No 4064/89 , 21 December 1989, consolidated text "the merger regulation" Available at: http://europa.eu.int/comm/competition/mergers/legislation/ regulation/consolidated/en.pdf

Competition Memo: November 1999 The Airtours case Available at: http://www.crai.com/ecp/assets/Airtours.pdf

MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 15-17 Available at: http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1998/fcc98225.pdf

New Merger Regulation frequently asked questions Available at : http://europa.eu.int/rapid/pressReleasesAction.do?reference=MEMO/04/9&format=HTML&aged=0&language=EN& guiLan guage=en

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Endnotes

1 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 15-17. Available at: http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1998/fcc98225.pdf

2 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 19-22. Available at: http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1998/fcc98225.pdf

3 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 46 Available at: http://www.fcc. gov/Bureaus/Common_Carrier/Orders/1998/fcc98225.pdf

4 lbid., 47

5 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 50-56. Available at: http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1998/fcc98225.pdf

6 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 57-66. Available at: http://www. fcc.gov/ Bureaus/ Common_Carrier/Orders/1998/fcc98225.pdf

7 lbid., p.94.

8 lbid., p. 102.

9 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 79-80. Available at: http://www.fcc.gov/ Bureaus/Common_Carrier/Orders/1998/fcc98225.pdf

10 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.2. Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_1998 0708_600_en.pdf

11 lbid., p.2.

12 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.3. Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600_en.pdf

13 lbid., p.2.

14 lbid., p.3.

15 lbid., p.6.

16 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/ M.1069 – WorldCom/MCI), p.3, point 41 Available at: http://www. europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600 en.pdf

17 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.15. Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m106919980708600en. pdf

18 lbid., p. 17

19 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.17 Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600_en.pdf

20 lbid., p. 18.

21 lbid., p. 19-20.

22 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.20 Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600_en.pdf

23 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.21 -26 Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600_en.pdf

24 libd., p.22.

25 libd., p.26.

26 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.27-29 Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600_en.pdf

27 lbid., p.31.

28 lbid., p.32.

29 lbid., p.33.

30 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p. 84-90 Available at: http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1998/fcc9825.pdf

31 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement,(Case No IV/M.1069 – WorldCom/MCI), p.45. Available at: http://www.europa. eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600_en.pdf

32 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p.127. Available at: http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1998/fcc9825.pdf

33 COMMISSION DECISION of 8 July 1998 declaring a concentration to be compatible with the common market and the functioning of the EEA Agreement, (Case No IV/M.1069 – WorldCom/MCI), p.1. Available at: http://www.europa.eu.int/comm/competition/mergers/cases/decisions/m1069_19980708_600_en.pdf

34 Council Regulation (EEC) No 4064/89, 21 December 1989, consolidated text "the merger regulation", Article 3 (1) (a). Available at: http://europa.eu.int/comm/ competition/mergers/legislation/regulation/consolidated/en.pdf

35 Council Regulation (EEC) No 4064/89 , 21 December 1989, consolidated text "the merger regulation", Article 6(1)(c). available at: http://europa.eu.int/comm/competition/mergers/legislation/regulation/consolidated/en.pdf

36 New Merger Regulation frequently asked questions Available at : http://europa.eu.int/rapid/pressReleasesAction.do?reference=MEMO/04/9&format=HTML&aged=0&language=EN &guiLanguage=en

37 New Merger Regulation frequently asked questions Available at http://europa.eu.int/rapid/pressReleasesAction.doreference=MEMO/04/9&format=HTML&aged=0&language=EN &guiLanguage=en.

38 Competition Memo: November 1999 The Airtours case available at: http://www.crai.com/ecp/assets/Airtours.pdf

39 Béatrice DUMONT and Peter HOLMES, Competition Policy and Market Regulation, College of Europe, winter 2005-2006, (power point presentation), p.7-8

40 Kolasky William: What is competition? A comparison of US and European perspectives – The Antitrust Bulletin, Spring-Summer 2004, p. 42

41 MEMORANDUM OPINION AND ORDER, Federal Communications Commission, Washington, D.C. 20554, September 14, 1998, p.11 available at: http://www.fcc.gov/Bureaus/Common_Carrier/Orders/1998/fcc9825.pdf

42 lbid., p12.