US telco GTE has slapped an antitrust lawsuit against MCI and Worldcom in a bid to block their proposed $38 billion merger.
The move aims to prevent the combined forces of Worldcom and MCI - numbers one and two in the league of Internet backbone providers - from monopolising the Internet or ?significantly endangering competition in long distance telephone markets?.
GTE believes the merged firm would control between 40 per cent and 60 per cent of the Internet backbone.
William Barr, GTE executive vice president and general counsel, said: "From the outset, GTE has consistently opposed this merger as highly anti-competitive."
The lawsuit follows a recent two-day meeting at which Worldcom and MCI were to answer European Commission objections to their marriage - with extensive testimony from GTE (see Newswire 18 May).
US antitrust officials are also examining whether the merger could thwart competition.
Some observers believe the lawsuit is sour grapes on GTE?s part. It mounted a $28 billion cash bid for MCI after Worldcom first made its overtures in October 1997.
Barr said: "We are confident the merger authorities will conclude this merger is unlawful and cannot go forward. 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."
Bell Atlantic, Bell South and the Communications Workers of America have all filed petitions against the proposed merger.
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