| FOR IMMEDIATE
TUESDAY, JUNE 27, 2000
TDD: (202) 514-1888
ACQUISITION OF SPRINT
Unless Blocked, Deal Would Result in Higher Prices for Millions of Consumers
WASHINGTON, D.C. -- The Department of Justice today sued to block the merger of WorldCom Inc. and Sprint Corporation because the deal would reduce competition in many of the nation's most important telecommunications services and would result in higher prices for millions of consumers and businesses. The proposed merger, between two of the three largest U.S. telecommunications companies, is the largest merger challenge by the Justice Department.
"This merger threatens to undermine the competitive gains achieved since the Department challenged AT&T's monopoly of the telecommunications industry 25 years ago," said Attorney General Janet Reno. "It is critical to our economy that we preserve competition for services that so many of us rely upon in our everyday lives--long distance calls, data network services and internet connections."
"American consumers, businesses, and internet users have received enormous benefits from the competitive telecommunications and internet markets," said Joel I. Klein, Assistant Attorney General of the Department's Antitrust Division. "If WorldCom were allowed to acquire Sprint, large and small businesses and millions of individual consumers would have to pay higher prices and accept lower service quality and less innovation."
The Department's suit, filed in U.S. District Court in Washington, D.C., seeks a permanent injunction to prohibit the merger.
In the residential long distance telephone markets and several other telecommunications markets, WorldCom and Sprint are the only substantial competitors to AT&T and to each other. Each has both constructed national and international fiber optic networks and developed sophisticated systems for handling millions of customer accounts, hired and trained large workforces capable of providing a variety of high-quality telecommunications services to customers throughout the nation, and invested billions of dollars over many years to establish widely known and trusted brands.
According to the complaint, the proposed merger would violate the antitrust laws by reducing competition in many of the nation's most important telecommunications markets. These markets include:
"Other carriers have entered the market on a much smaller scale," Klein said. "But none has produced beneficial effects on competition comparable in magnitude to the effects produced by competition between WorldCom and Sprint, and between those companies and AT&T."
WorldCom (formerly MCI WorldCom Inc.), which had revenues of $37 billion in 1999, is a Georgia corporation headquartered in Clinton, Mississippi. It is one of the largest global telecommunications providers, with operations in more than 65 countries and more than 22 million residential and business customers worldwide.
Sprint, which had revenues of approximately $17 billion in 1999, is a Kansas corporation headquartered in Westwood, Kansas. It is one of the largest U.S. telecommunications providers, serving more than 17 million residential and business customers.
The parties cannot consummate the transaction until they obtain regulatory approvals from the Federal Communications Commission and numerous state public utilities commissions in the U.S., as well as from the Commission of the European Communities and Brazilian antitrust authorities.