FTS 2001 contractors drop plans to merge

FTS 2001 contractors drop plans to merge

JUNE 27—FTS 2001 contractors WorldCom Inc. and Sprint Corp. withdrew their merger plans today after the Justice Department filed suit to block the $129 million deal.

The General Services Administration awarded Sprint and WorldCom the FTS 2001 long-distance communications contracts in December 1998 and January 1999, respectively. In October 1999, WorldCom announced its plan to acquire Sprint.

Although there was some concern that a merger of the two companies would eliminate competition for long-haul services for federal users, GSA officials said at the time that they were satisfied that contract provisions would ensure competitive pricing. Also, FTS 2001 is not a mandatory program, so contractors would have to continue competing with non-FTS 2001 service providers even after a merger, which would help control prices, GSA officials said.

In announcing the suit, Justice officials contended that the merger would hurt competition in long-distance telecommunications by combining two of the three major players—the other being AT&T Corp.—in the market. Regulators in Europe also have opposed the merger.

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