EU Approves MCI-Worldcom Merger

European Union regulators have approved the $37 billion merger between U.S. telecommunications groups MCI Communications Corp. and Worldcom Inc. on condition that MCI's Internet business is sold.

Wednesday's approval from the European Commission had been widely expected after the companies accepted its demand that they divest overlapping businesses, primarily MCI's Internet interests.

"The parties have committed to divesting MCI's Internet assets, thus eliminating the overlap," the 20-member EU executive body said in a statement.

MCI and Worldcom are the second- and fourth-largest long-distance telephone companies in the United States. The merger would be the second-richest in the telecommunications industry after SBC Communications Inc.'s planned $60.1 billion purchase of rival Baby Bell Ameritech Corp.

Their merger needed EU approval because the companies do business in Europe.

Under EU rules, the Commission checks all mergers with a major impact on markets within the 15-nation bloc. It can demand changes to, or veto, those it judges to infringe European laws governing fair competition.

The alliance, proposed in November, continues a global trend toward consolidation of the telecommunications industry.

The EU authorities stressed they have cooperated closely with the U.S. Department of Justice, which has yet to give its approval to the planned merger.

The Commission added that the companies must seek the consent of European and U.S. authorities to the proposed buyer of divested activities.

The Commission may appoint a trustee to "oversee compliance with the undertakings," the statement said.

Written By Paul Ames