A European Court yesterday ruled that the European Union’s primary antitrust regulator was wrong to block a planned merger between WorldCom (now MCI) and Sprint Corp four years ago. The ambitious USD120 billion tie-up between the country’s No.2 and No.3 long-distance operators was called off in July 2000 following objections from the European Commission’s executive arm, led by erstwhile EU competition commissioner Mario Monti, and a similar filing by the Department of Justice in the US. At the time the European Commission argued that the merger would give WorldCom a dominant position in the internet bandwidth market and also in providing telephony services to multinational companies. However, the Luxembourg-based Court of First Instance of the European Court of Justice has overturned the Commission’s ruling, albeit on a ’technicality’, stating that it did not have the authority to prevent the deal as the two companies had already withdrawn their notification of the merger, meaning that the Comission no longer had the power to adopt a veto decision.
Yesterday’s court ruling on a case filed four years ago – well before WorldCom’s highly publicised USD11 billion accounting fraud, its subsequent bankruptcy and name change to MCI – is more relevant than it might first appear. MCI continued the lawsuit in the hope of overturning what it sees as a ‘precedent-setting decision’ which could fatally undermine other merger deals in the future. MCI executive vice president and general counsel, Stasia Kelly, welcomed the ruling saying it would ‘assure that future technology service transactions will receive a fair and appropriate review’. The decision is a further blow to Mario Monti who suffered the ignominy of seeing three of his merger prohibition rulings being overturned within a few months of each other in 2002. A spokesman for the commissioner was quick to point out that the Court’s findings did not adjudge whether the Commission ‘was right or wrong’, but annulled the edict on a ‘technicality’. Monti will be succeeded by Neelie Kroes of the Netherlands on 1 November 2004.