GTE Files Suit to Block WorldCom-MCI Merger

GTE Corp. yesterday filed a
private antitrust lawsuit in federal court in an effort to block the $38
billion WorldCom Inc.–MCI Telecommunications Corp. merger.

Citing monopoly fears, GTE said the proposed WorldCom-MCI alliance of the
two leading telcos would allow them to own 40-60% of the Internet backbone
service.

The company also said competition in the retail long distance telephone
market would be severely threatened if the second and fourth biggest long
distance carriers joined forces.

GTE said the alliance would effectively remove WorldCom as the key supplier in the wholesale long distance market, thus reducing competition for resellers.

Previously the merger was vigorously opposed by GTE and a number of other
telcos before the Federal Communications Commission (FCC), the U.S.
Department of Justice (DOJ), and the European Commission (EC).

“From the outset, GTE has consistently opposed this merger as highly
anticompetitive,” said William P. Barr, executive vice president and
general counsel of GTE, in a statement.

“Subsequent events have confirmed this position. Both the U.S. Department of Justice and the European Commission are in the midst of intensive investigation of this transaction–especially its impact on the Internet and the domestic and international long-distance markets. Indeed, the European Commission has recently issued a detailed Statement of Objections setting forth its opposition to the merger as anti-competitive.”

On April 28 the EC announced hearings would be held May 12 and 13, calling on WorldCom and MCI to respond to complaints. Antitrust officials from the U.S. also are reportedly looking into monopolization and unfair competition charges. The merger cannot be completed until the EC and DOJ grant approval.

Other FCC complainants include Bell Atlantic, Bell South, the
Communications Workers of America, in addition to various European companies and the AFL-CIO.

“We are confident that the merger authorities will conclude that this merger is unlawful and cannot go forward,” Barr added. “For that reason, we are not seeking a preliminary injunction but instead will continue to work closely with the various authorities to assist in their review.

“GTE must be in a position, if necessary, to vindicate its rights and
ensure that all its concerns have been adequately and effectively met. This matter is important to GTE as both a customer and a competitor.”