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CWA Fights Sprint-MCI WorldCom Merger
CWA called on the Federal Communications Commission to either block MCI WorldCom’s proposed acquisition of Sprint Corp., or to impose sufficiently stringent conditions that will remedy the anti-competitive harm to the Internet and long distance markets that would result from the mega-merger.
The Sprint-MCI WorldCom merger continues to be investigated not only by federal and state regulatory agencies, but by European Union antitrust authorities who say they will need several additional months to review the deal. The European Commission has identified several regulatory concerns, including the likelihood that competition would be restricted in global corporate communications and Internet services.
In its filing to the FCC, CWA also called for provisions to protect local phone customers and Sprint employees from threatened service cutbacks, similar to those that occurred when MCI and WorldCom merged in 1998.
Under the proposed merger, the second and third largest long distance carriers would be combined, with AT&T and the newly merged company controlling 80 percent of the long distance market. A merged Sprint-MCI WorldCom “would have the power and incentive to raise prices or degrade service at anti-competitive levels in both the consumer and larger business markets,” CWA told the FCC. The mega-merger also would result in just one dominant Internet backbone carrier, whose 50 percent market share would give it the ability to raise prices or degrade the quality of interconnection, CWA said.
The earlier divestiture of MCI’s Internet business, imposed by regulators as a condition of the merger with WorldCom, “failed to achieve its stated goal to create another viable Internet backbone competitor” and would not be a sufficient remedy in this case, the union added.
The companies have projected a $1.3 billion first-year post-merger savings, CWA noted, adding that job cuts are likely to be very large in order to achieve this level.
The Sprint-MCI WorldCom merger continues to be investigated not only by federal and state regulatory agencies, but by European Union antitrust authorities who say they will need several additional months to review the deal. The European Commission has identified several regulatory concerns, including the likelihood that competition would be restricted in global corporate communications and Internet services.
In its filing to the FCC, CWA also called for provisions to protect local phone customers and Sprint employees from threatened service cutbacks, similar to those that occurred when MCI and WorldCom merged in 1998.
Under the proposed merger, the second and third largest long distance carriers would be combined, with AT&T and the newly merged company controlling 80 percent of the long distance market. A merged Sprint-MCI WorldCom “would have the power and incentive to raise prices or degrade service at anti-competitive levels in both the consumer and larger business markets,” CWA told the FCC. The mega-merger also would result in just one dominant Internet backbone carrier, whose 50 percent market share would give it the ability to raise prices or degrade the quality of interconnection, CWA said.
The earlier divestiture of MCI’s Internet business, imposed by regulators as a condition of the merger with WorldCom, “failed to achieve its stated goal to create another viable Internet backbone competitor” and would not be a sufficient remedy in this case, the union added.
The companies have projected a $1.3 billion first-year post-merger savings, CWA noted, adding that job cuts are likely to be very large in order to achieve this level.