The US Department of Justice's antitrust lawsuit to block the WorldCom/Sprint merger, filed today in federal court, means an almost certain end to the proposed US$129 billion merger.
Even before Tuesday's filing, however, opposition to the deal by regulators in the US and in Europe had threatened either to substantially restructure the deal or scuttle it altogether.
As recently as Monday, the companies were considering whether to withdraw their applications for merger approval rather than face outright rejection by the European Commission (the companies did indeed withdraw their EU application earlier Tuesday), the US Justice Department and the Federal Communications Commission.
Now, given the DOJ's lawsuit seeking to block the deal, the companies are almost certain to scrap their plans, according to industry observers.
In a statement released this morning, US Attorney General Janet Reno said, "This merger threatens to undermine the competitive gains achieved since [Justice] challenged AT&T's monopoly of the telecommunications industry 25 years ago."
Regulatory concerns about the deal have focused on the two companies' potential to unfairly dominate the markets for long-distance and Internet transport services.
To allay those concerns, MCI WorldCom had been willing to sell off Sprint's Internet backbone and, when that proposal wasn't enough, even offered to divest itself of Sprint's long-distance business as well.
