Europe to OK AOL, Time-Warner deal tomorrow

But conditions will apply

AOL and Time-Warner will learn tomorrow that their proposed $135 billion merger has been allowed by European Commission anti-trust regulators to proceed - provided conditions are met.

At least, that's what an EC insider has told Reuters. That the EC will discuss the AOL/Time-Warner merger was admitted yesterday by a Commission spokeswoman. Officials may even make their decision public, even though they have until 24 October to do so.

"[The merger] will be cleared on Wednesday with a few conditions,'' Reuters' source said.

What conditions will be imposed isn't yet known, but they are likely to centre on AOL's joint ventures with various companies to provide local AOL services. AOL is expected to buy out Bertelsmann's 50 per cent stake in AOL Europe, and Vivendi's stake in AOL France. It's worth noting that the AOL Europe plan may not now take place, since it was proposed to prevent AOL gaining to tight a control on access to digital music from the major labels. Now EMI and Warner are no longer going to get together, that fear is reduced somewhat.

For its part, Time-Warner will promise not to discriminate against ISPs who aren't affiliated with AOL when it comes to providing content online.

AOL and Time-Warner have agreed in principle to all these measures - the EC's conditions will have to be made to ensure that the two companies make good their promises. ®

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