|
|
|
Press Release Tuesday, June 27, 2000 |
Contact: |
After allowing massive industry consolidation,
antitrust officials finally say "enough" to merger mania
WASHINGTON, D.C. -- Gene Kimmelman, Co-Director of Consumers
Union's Washington DC office, made the following statement today
regarding the lawsuit filed by the U.S. Department of Justice to
block the proposed merger of WorldCom and Sprint:
"Consumers Union supports the Department of Justice's challenge of
the WorldCom-Sprint merger. A combination of the second- and
third-largest long-distance companies would diminish consumer choice
and ultimately lead to higher long-distance rates.
"We are pleased to see antitrust officials finally step in and say
'enough is enough' in the face of merger mania. Unfortunately, it
was the leniency of antitrust officials that motivated WorldCom and
Sprint to attempt this merger in the first place.
"Antitrust officials have allowed massive consolidation among
local telephone companies, enabling six of the large, local telephone
monopolies to consolidate into two regional giants. They also
allowed AT&T to buy substantial ownership of cable TV systems
serving more than half of all cable customers in the United States.
So, it is not surprising that WorldCom and Sprint felt the need to
join in on the consolidation binge.
"WorldCom and Sprint argued that massive industry consolidation
made it necessary for them to find a way to challenge the local phone
and cable giants. But this merger was not the way to do it because
it would have harmed long-distance competition without ensuring there
would be clear benefits in other markets. If WorldCom and Sprint had
made a credible case that they could have challenged cable and local
phone giants in a meaningful way, they might have had a chance at
clearing the regulatory hurdles. But their technology and asset base
simply cannot promise enough competition in the local telephone,
video, or Internet markets to offset the dangers this merger would
pose for long-distance competition.
"We hope that today's move marks the beginning of stronger
antitrust enforcement coupled with greater emphasis on promoting
competition to the recently-consolidated local phone and cable
giants."
Consumers Union, publisher of Consumer Reports magazine, is an independent nonprofit testing, educational and information organization serving only the consumers. We are a comprehensive source of unbiased advice about products and services, personal finance, health, nutrition and other consumer concerns. Since 1936, our mission has been to test products, inform the public and protect consumers.
