The Verizon-MCI Merger
|
|
ICMR HOME | Case Studies Collection
Case Details:
Case Code : BSTR259
Case Length : 19 Pages
Period : 2000-07
Pub Date : 2007
Teaching Note :Not Available
Organization : Verizon, MCI
Industry : Telecom
Countries : US
To download The Verizon-MCI Merger case study (Case Code:
BSTR259) click on the button below, and select the case from the list of available cases:
Price:
For delivery in electronic format: Rs. 300;
For delivery through courier (within India): Rs. 300 + Rs. 25 for Shipping & Handling Charges
» Business Strategy Case Studies
» Case Studies Collection
» Business Strategy Short Case Studies
» View Detailed Pricing Info
» How To Order This Case
» Business Case Studies
» Case Studies by Area
» Case Studies by Industry
» Case Studies by Company
Please note:
This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
|
|
<< Previous
"Verizon's acquisition of MCI will ensure the continued
presence of a national, full-service company with the technology and financial
strength, to deliver a broadband future and create economic growth."1
- Tom Tauke, Executive Vice President, Public Affairs,
Policy and Communications,
Verizon Communications Inc., in 2005.
"It's a great deal for Verizon. The shareholders of MCI
didn't get a great deal, but maybe the combined companies will be more powerful
and the returns will offset that."2
- Jay Arnold, Portfolio Manager at Abacus Asset Management3,
in 2005.
Introduction
|
On March 30, 2007, Emmet G Sullivan, Judge at the District Court of Columbia,
ruled that the US-based Verizon Communications Inc. (Verizon), one of the
leading communication providers in the world, could legally merge with MCI Inc4.
(MCI). This ruling reaffirmed the decree of the Department of Justice (DoJ)
issued in October 2005, that had earlier allowed the merger. DoJ's decree had
been challenged in court by Comptel, representing the competitor companies that
could be affected by the merger and Alliance for Competition in
Telecommunications (ACTel), a group of smaller telecommunication companies.
Analysts said that further appeal on the merger was unlikely after the ruling.
|
|
When the Verizon-MCI merger was announced in March 2005,
consumer groups and the American Antitrust Institute (AAI) expressed concern
that the merger, and the merger of AT&T and SBC would lead to a duopoly in the
US telecom market.
|
|
According to Jonathan Rubin, Research Fellow at AAI,
"The Verizon/MCI and SBC/AT&T mergers would create a 'duopoly of
one-stop shops' selling a wide range of telecom services.
Two large, vertically-integrated firms may find the gains from
allocating markets and avoiding vigorous direct competition too great to
resist.
In such a scenario, the presence of a number-three player, a
competitive-fringe or a market maverick, can make all the difference
between a dynamic competitive market and a stilted, static one.5 (Refer
Exhibit I for more about the telecom industry in the US). |
The Verizon-MCI Merger
- Next Page>>
|
