GTE sues to block WorldCom MCI merger

GTE Corp. yesterday filed an antitrust lawsuit to block the planned US$30 billion merger of WorldCom Inc. and MCI Communications Corp., GTE confirmed in a statement today.

Filed in U.S. federal district court in Washington, D.C., the suit alleges that the merger of the number-one and number-two telecommunications backbone providers will lead to a monopoly for Internet backbone services.

GTE contends that WorldCom-MCI would account for 40% to 60% of the Internet backbone network, and also would lead to decreased competition in the retail long-distance market. The merger would remove WorldCom from the market as the main supplier of wholesale long-distance service and diminish competition for long-distance resellers, including GTE, that have competed with MCI, AT&T Corp. and Sprint Communications Corp., the lawsuit alleges.

GTE has been a leading critic of the merger, opposing it to U.S. federal regulators and to the European Commission.

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

MCI Chairman Bert Roberts last month at Spring Comdex publicly blasted GTE for its efforts to derail the merger. GTE last October also made a bid for MCI, but WorldCom offered a higher price. The complaint - filed in Washington D.C. district court late yesterday - claims the merger will "substantially lessen competition in the telecoms industry" and will "destroy the critical competitive balance that exists on the Internet today by creating a dominant provider of Internet backbone service," according to a copy of the complaint obtained by the Wall Street Journal.

WorldCom/MCI deal to go through ringer
Network World, 3/23/98.

GTE tries for MCI's hand
Network World Fusion, 10/15/97.

WorldCom pays off BT, wins MCI
Network World, 11/17/98.