WorldCom has reinvented itself as MCI

AT&T said MCI routed calls through Canada, forcing AT&T to pay expensive connection fees.

The lawsuit also accused regional telecom group Onvoy of working with MCI in routing the calls.

The row over routing has been simmering for a number of weeks and MCI has denied any wrongdoing.

The Justice Department asked for more information on the issue in July when complaints first emerged.

Fee row

"The lawsuit alleges, among other claims, fraud, civil conspiracy, unjust enrichment, racketeering conspiracy and substantive racketeering through a pattern of multiple acts of mail fraud and wire fraud," AT&T said in a statement.

AT&T said it would seek damages when MCI emerges from bankruptcy, which is expected to happen later this year.

"This is nothing more than AT&T trying to make headlines from something that is at best a commercial dispute that started weeks ago," said MCI spokesman Brad Burns.

"We will continue to fully cooperate with the Department of Justice and its ongoing investigation."

Onvoy chief executive Janice Aune said: "Onvoy anticipated that in the weeks prior to the September bankruptcy hearings that AT&T and the other players would make a move such as this."

MCI, known at the time as WorldCom, filed for the US' largest bankruptcy in July 2002 following an accounting scandal which is now thought to have reached $11bn.