Mergers: Commission approves acquisition of MCI by Verizon
European Commission - IP/05/1234 07/10/2005
Brussels, 7 October 2005
The European Commission has cleared under the EU Merger Regulation the proposed acquisition of MCI by Verizon Communications (“Verizon”), both US companies. After carefully examining the operation, the Commission concluded that the transaction would not significantly impede effective competition in the European Economic Area (EEA) or any substantial part of it.
Verizon provides telecommunication services (local, domestic long distance and international voice telephony services and internetworking, wireless, directories services) to residential, small business and some large corporate and government customers in various regions of the US.
MCI (formerly WorldCom) is a global provider of advanced communication services (business data, Internet and voice services) to businesses and governments. It also sells telecommunication services to consumers in the United States.
The transaction has effects on markets for global internet connectivity services, global telecommunication services and international voice telephony.
Internet connectivity services are provided by a handful of large international networks such as that owned by MCI which interconnect in order to offer full connectivity to their customers. Access to these networks is indispensable for downstream internet service providers (ISPs) in order to achieve universal reach on the Internet. As Verizon is active as a local US ISP, the transaction does not give rise to direct horizontal concerns in the market for global internet connectivity. Its network will nevertheless add to the scope of MCI’s Internet network. The Commission’s assessment of the transaction showed that this overlap between the activities of Verizon and MCI is, however, very limited and that the combined firm will continue to face several strong and effective competitors.
The Commission also examined the vertical effects which result from the combination of Verizon’s activities at the local loop level in a number of areas in the US (i.e. the “last mile” connection of a telecommunication network to the end-customer) with MCI’s upstream global telecommunication or international voice telephony activities. However, the Commission’s investigation showed that the effect of this integration will not materially affect competitors’ ability to provide such services.