FOR IMMEDIATE RELEASE                                          AT
MONDAY, JULY 7, 1997                               (202) 616-2771
                                               TDD (202) 514-1888


   JUSTICE DEPARTMENT ASKS COURT TO MODIFY AND EXTEND PREVIOUS
     BRITISH TELECOM/MCI SETTLEMENT AFTER REVIEWING NEW DEAL


        Justice Department Acts to Prevent Discrimination 
                       Against Competitors


     WASHINGTON, D.C. -- The Department of Justice today asked
the U.S. District Court in Washington, D.C. to modify and extend
the existing 1994 settlement involving British Telecommunications
plc and MCI Communications Corp., to ensure that British
Telecom's proposed acquisition of MCI does not disadvantage
competitors and raise prices for consumers.

     The existing consent decree, entered in September, 1994,
settled the Department's charges that British Telecom's
acquisition of an initial 20 percent interest in MCI violated
merger laws.

     In its original complaint, the Department alleged that
British Telecom could use its existing market power in the United
Kingdom to disadvantage MCI's competitors in the market for
telephone calls between the U.S. and the U.K., resulting in
higher prices to U.S. consumers making such international calls.

     "The existing settlement has worked well to prevent the
anticompetitive effects the Department feared would result from
the initial transaction,"  said Joel I. Klein, Acting Assistant
Attorney General in charge of the Department's Antitrust
Division.  "A lot has happened in this dynamic industry since
1994, but British Telecom still has market power in the U.K.  We
need to make certain changes to the consent decree and extend it
to ensure that U.S. consumers continue to enjoy the lower prices
and better service associated with competition on international
routes."

     British Telecom, headquartered in London, England, is the
dominant carrier in the U.K. and one of the largest providers of
telecommunications services in the world, with 1996 revenues of
$23.3 billion.  MCI, of Washington, D.C., is the second largest
U.S. telecommunications company and the world's third largest
international carrier, with 1996 revenues of $18.5 billion.

     The original 1994 settlement contained provisions designed
to prevent British Telecom from using its market power in the
U.K. to discriminate in favor of MCI, or in favor of a British
Telecom/MCI joint venture, at the expense of competing carriers
in the market for international telecommunications services
between the U.S. and the U.K., and around the world.  

     The proposed modified final judgment filed today in U.S.
District Court in Washington, D.C., retains and, in some cases,
strengthens these protections to take into account the full
integration of British Telecom and MCI, as well as changed market
conditions.  Specifically, it requires the newly formed company
to increase the amount of information it reports to the
Department to facilitate the detection of specific instances of
discrimination, and to support any complaints U.S. competitors
might make to the relevant U.S. and U.K. regulatory agencies.    

     The proposed modified final judgment also revises the
confidentiality provisions of the existing decree to reduce the
risk that confidential, competitively sensitive information that
British Telecom obtains in the course of its relationships with
other U.S. telecommunications providers is not disclosed to MCI
through the corporate parent, Concert plc. 
 
     The proposed filing also extends the time period of the
existing decree and enhances the Department's ability to monitor
and enforce compliance with the decree by naming the newly formed
company as a party to the decree, and giving the Department
access to its documents and personnel.

     While both the U.S. and U.K. governments have enacted
reforms since the original settlement was entered that alter the
status of competition for international traffic between the U.S.
and the U.K., British Telecom still maintains substantial market
power in local and domestic long distance services in the U.K.

     The proposed modifications to the final judgment, which
require court approval, will continue to protect U.S. consumers
from the possibility that the newly formed company, using British
Telecom's local service monopoly, would harm competition in the
markets for telephone calls between the U.S. and the U.K., and
for worldwide telecommunications services.


     During the course of its investigation, the Department also
considered whether the newly formed company could deter or delay
the entry of new facilities-based competitors on the U.S.-U.K.
route by refusing to make available to new entrants certain
necessary facilities, such as transatlantic cable capacity, or
U.S. backhaul services.  Modification of the existing final
judgment is not required to ensure that new entrants have access
to transatlantic cable capacity, however, because the European
Commission has required, as a condition of its approval of the
merger, that British Telecom divest all the overlapping cable
capacity it will obtain through the proposed merger.
  
     In addition, under a procedure outlined in the 1994
settlement, the Department has referred to the Federal
Communications Commission the issue of whether regulatory action
is appropriate to ensure that new entrants have access to U.S.
backhaul facilities.  

     At the same time, however, the Department will continue to
investigate new entrants' access to backhaul facilities.  And,
the parties have further agreed not to contest further action by
the Department on this issue, if such action is necessary.

     The proposed modifications to the decree will be published
in the Federal Register, together with the Department's
supporting memorandum.  Any person may submit written comments on
the proposed decree modifications to Donald J. Russell, Chief,
Telecommunications Task Force, Antitrust Division, U.S.
Department of Justice, 555 Fourth Street, N.W., Washington, D.C. 
20001.
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