American Antitrust Institute to DOJ: Block XM-Sirius

Nonprofit Group Urges Department of Justice to File Suit vs. XM Satellite Radio-Sirius Satellite Radio Merger

By John Eggerton -- Broadcasting & Cable, 2/19/2008 5:46:00 PM

The American Antitrust Institute, a nonprofit that advocates an aggressive stance toward antitrust enforcement, recommended that the Department of Justice file suit against the proposed XM Satellite Radio-Sirius Satellite Radio merger.

Justice is currently considering whether or not to approve the deal, with the definition of the satellite-radio market a key component.

AAI argued that satellite radio, not generally downloadable audio in its many forms, is the relevant market and that allowing the only two satellite-radio companies operating in that market to merge would create a monopoly, the group said in a release Tuesday.

The group added that Justice has a "duty" to try to block the merger, saying that while it doesn't think the merger call is a close one, "if the DOJ considers this to be a close question [there have been reports of divisions within Justice over whether or not to approve], the congressional intent and strong precedent require that the division make the decision in favor of avoiding the creation of what seems likely to be a monopoly."

Broadcasters have been pushing hard against the merger, arguing that satellite radio competes with them for local ad dollars but they cannot compete with it as a national service. The combination would be an unfair "merger to monopoly," they argued.

Sirius and XM have countered that the market is the broader audio-delivery universe that includes satellite and cable radio, the Internet radio and iPods, as well as terrestrial radio, and that the merger would be good for consumers and provide a stronger competitor in that audio market.