Roll Out the Red Tape

WASHINGTON — After thriving as an independent company in the fast-moving telecommunications industry, MCI Communications Corp., its shareholders and customers are about to find out how slow and arduous the merger business can be.

As the long-distance giant last week began formal talks with its three competing suitors--British Telecommunications, WorldCom Inc. and GTE Corp.--lawyers and advisors for the three companies were settling in for months of legal and regulatory wrangling with as many as 30 state, federal and international agencies.

Although businesses of all stripes have complained about excessive government red tape, telecommunications deals are indeed special cases. Along with utility and bank mergers, they are among the most closely scrutinized of business transactions.

The $22-billion merger of Bell Atlantic Corp. and Nynex Corp., for instance, was reviewed by the Justice Department and Federal Communications Commission for nearly a year and a half before the FCC finally gave it the green light in August.

Similarly, it took government regulators a year to approve both the $15.7-billion combination of SBC Communications Inc. and Pacific Telesis Group as well as AT&T Corp.'s $11.5-billion purchase of wireless giant McCaw Cellular Communications Inc.

"I think you find any time you have more than one agency involved, things are going to take time--the more parties at the table, the more cooks in the soup," said Melinda Mullet, director of regulatory affairs in the Washington office of Arthur Andersen.

But in MCI's case, at least one of the suitors, WorldCom, is wooing the long-distance carrier by claiming its offer is so streamlined and so well-packaged that it can secure all of the needed regulatory approvals in less than six months.

"Our deal is much faster and cleaner than GTE's," said Andrew Lippman, a partner in the Washington law firm of Swidler & Berlin, which is acting as outside counsel for WorldCom. "It carries a lot less regulatory risk."

Antitrust scrutiny theoretically is supposed to be a fast-track affair so as not to unduly hinder the wheels of commerce.

Such reviews are governed principally by the Clayton and Hart-Scott-Rodino Act, which permits companies to close their deals within 21 days after government antitrust officials make a so-called second request for documents.