EU frowns on WorldCom deal

EU regulators will recommend blocking the $115 billion (€123 billion) telecoms merger of WorldCom and Sprint unless the firms draw up a radical restructuring of the deal.

Mr Mario Monti, the EU's competition commissioner, said yesterday he would reject the current plan. But he did hold open the door to a possible settlement under "exceptional circumstances" if the firms offered a restructured deal that resolved regulatory concerns.

Brussels officials are concerned about the power over EU Inter net services WorldCom would have after a merger with Sprint. The firms have made it clear to Wall Street they will complete the deal. WorldCom indicated last week it was preparing to dispose of all of Sprint's Internet and long-distance operations to win regulatory approval. The firms indicated yesterday they remained optimistic about reaching a negotiated settlement with the US Justice Department and the European Commission, the EU's executive.

After two days of meetings with US antitrust officials in Washington, Mr Monti said: "My proposal to the Commission will be to prohibit the merger."

The Commission's deadline for reviewing the merger is July 12th. Under a normal timetable the last chance for a negotiated settlement was two weeks ago. The Commission has taken a tough line on deadlines in its merger review timetable over the past two years. While European officials have concentrated on global Internet networks, their US counterparts have objected strongly to the domestic combination of the second- and third-largest long distance telephone carriers. WorldCom hopes to settle both concerns by shedding the fibreoptic network that supports Sprint's long-distance and Internet business.