MCI-Sprint Merger in Trouble

The Wall Street Journal reports that the Justice Department’s antitrust staff has raised serious objections to the proposed MCI WorldCom merger with Sprint. That’s excellent news, provided the antitrust chief, Joel Klein, follows the reported recommendations.

This merger has been a lousy idea from Day One. It would concentrate far too much power in the hands of a single company. But the Justice Department, Federal Communications Commission and other agencies have been supine in their oversight of the rampant merger mania in telecommunications. It’s no wonder that these giant companies got the idea they could create even bigger ones.

If the department formally objects to this one, it will send a vital message.

AOL: Guts of a Burglar

In the mid-1990s, America Online relied on blatantly improper accounting methods to make the company’s financial results look much better than they actually were. The strategy worked, because by the time the company was forced to be more honest it had achieved the critical mass it needed to survive.

Years later, the Securities and Exchange Comission got AOL to offer what doesn’t amount even to a slap on the wrist, as the Mercury News’ Scott Herhold notes in his Stocks.Comment column today.

Bottom line, apparently: What’s acceptable is what you can get away with.

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