The Justice Department has hired a prominent Wall Street antitrust lawyer, Stephen Axinn, to review the proposed $129 billion merger of the nation's second- and third-largest long-distance telephone companies, MCI WorldCom Inc. and Sprint Corp., officials said yesterday.
Industry lawyers said the move is not unusual. The Justice Department occasionally brings in outside help on mergers of complexity and import. The MCI-Sprint deal would be the largest in history.
But news of Axinn's hiring, first reported Tuesday by the Wall Street Journal, does reinforce what many have assumed: The deal will be a particularly tough sell and probably won't gain approval without great scrutiny and the sale of assets.
Sources have previously told The Washington Post the deal is unlikely to gain regulatory blessing because it would leave 80 percent of the nation's long-distance business in the hands of two companies, AT&T Corp. and the new WorldCom. Some suggested Axinn's hiring could signal the possibility the Justice Department will eventually intervene to block the merger.
The department cautioned against reading anything into Axinn's hiring. "No decision has been made," spokesman Gina Talamona said. "We're still right in the middle of this investigation." Sprint and MCI WorldCom declined to comment.
Axinn is widely respected as a bright mind and quick study who spent three decades at the New York firm Skadden, Arps before leaving two years ago to start a practice specializing in antitrust and intellectual property. He is the author of a seminal book on antitrust law, "Acquisitions Under the Hart-Scott-Rodino Antitrust Improvement Act."
Those familiar with his work say Axinn has left no discernible ideological trail. In a recent essay in the New York Law Journal, he warned that "merger binges followed by the inevitable disruptions and divestitures that come from corporate over-eating cannot be conducive to stable growth." He has also spent much of his career advising Fortune 500 firms on how to gain merger approval.
Some assume Axinn has been hired to help the department's antitrust chief, Joel I. Klein, sift through documents and data, lending expertise on the review process rather than philosophical guidance.
"It doesn't really matter what kind of attitude Mr. Axinn brings to the case," said an antitrust professor with government experience. "Joel's going to decide this one for himself. It's going to be Joel's values that matter."
A telecommunications lawyer said the antitrust division is chronically overloaded with merger reviews while short on experienced litigators. Axinn's hiring underlines the likelihood the case could land in court, requiring a court-seasoned expert, the lawyer said.
"It's about treating this like a Microsoft case," the lawyer said. "It's one of those mergers that really influences the future of the economy."