American Antitrust Institute Rips DOJ Over XM-Sirius Ruling - Broadcasting & Cable

American Antitrust Institute Rips DOJ Over XM-Sirius Ruling

Advocates for Aggressive Antitrust Enforcement Urges Federal Communications Commission to Reject Satellite-Radio Merger
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The American Antitrust Institute, which opposed the XM Satellite Radio-Sirius Satellite Radio deal as a "merger to monopoly," said the Department of Justice, in finding no fault with the deal, created a higher bar for such monopoly findings while lowering the bar for a finding that such a merger would benefit consumers.

The AAI, which advocates for aggressive antitrust enforcement, pointed out that the DOJ, in its statement on the merger, said it took no action to block or limit the deal "because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite-radio customers."

The AAI added that the legal standard for raising red flags in a court review of mergers, per the Clayton Act, is whether a merger "may" substantially lessen competition, not that it "would" do so. AAI president Bart Foer also said in an e-mail Tuesday that the DOJ's statement lowers the standard for the consumer-friendly "efficiencies" that get to be logged on the plus side of a proposed merger, pointing to the language that accepted them if they "could benefit consumers."

The AAI also argued that Justice got it wrong when it defined the completive marketplace as "audio entertainment," including terrestrial radio, MP3 players and the Internet, rather than satellite radio, for which XM and Sirius hold the only two licenses.

And the AAI shared the National Association of Broadcasters' criticisms of Justice over interoperable radios. The DOJ said XM and Sirius were not competitive for existing subscribers because those subscribers don't have access to interoperable receivers that would play both. "The AAI finds this to be a particularly weak argument because the providers themselves never fully complied with the Federal Communications Commission mandate to develop such a receiver," the group said.

While the FCC has almost always agreed with Justice on merger calls, the AAI was hoping for a split decision. "Given the different standards and concerns of the FCC," it said, "the AAI believes it is perfectly appropriate for the FCC to reach a different conclusion from the DOJ."

While Justice is only required to decide whether or not the deal would violate antitrust laws, the FCC has additional public-interest considerations to weigh.

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