Microsoft Purchase of Telewest Under EU Review

BRUSSELS (03/22/2000) - The European Commission announced today an in-depth investigation into the planned joint acquisition of Telewest Communications PLC by Microsoft Corp. and Liberty Media Corp., a wholly-owned subsidiary of AT&T Corp.

The investigation gives the Commission four months to verify its concerns that the transaction will not only restrict competition in the market for software for digital set-top boxes by requiring Telewest to buy Microsoft software, but will also strengthen Telewest's dominant position as the supplier of cable services to consumers in its U.K. franchise area.

As required by European Union antitrust rules, the companies notified the Commission of their plans on March 1, 2000. At that time, Microsoft and Liberty vowed to preserve Telewest's independence, but these undertakings proved insufficient to meet all the Commission's concerns about the deal reducing competition in the market, according to a Commission statement.

Under EU merger control rules, the Commission must prevent any operation from creating or reinforcing a dominant position.

"This is all about the Commission's paranoia as regards Microsoft," one analyst who asked not to be identified remarked.

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