A federal judge in Manhattan has refused to throw out a class action lawsuit claiming that the merger of Sirius Satellite Radio and former rival XM Satellite Holdings created a monopoly and violated federal antitrust laws. US District Judge Harold Baer Jr. dismissed some of the claims against Sirius XM, but the antitrust class action claim is now heading toward trial on May 2nd.
Multiple class action lawsuits had been merged into what is now “Carl Blessing et al vs. Sirius XM Radio.” In all, the plaintiffs had sought to certify four classes seeking damages. The judge threw out the classes 1) seeking injunctive relief for everyone who had contracted with either satellite company for service, 2) claiming breach of contract and 3) claiming violation of various state consumer protection laws.
However, Judge Baer did certify the class claiming damage under the federal antitrust laws. That class is “All persons or entities who reside in the United States and who contracted with Sirius Satellite Radio, Inc., XM Satellite Radio Holdings, Inc., Sirius XM Radio Inc. or their affiliated entities for the provision of satellite digital audio radio services who, during the relevant period of July 29, 2008 through the present: (1) paid the U.S. Music Royalty Fee; (2) own and activated additional radios (“multi-radio subscribers”) and paid the increased monthly charge of $8.99 per additional radio; or (3) did not pay to access the content available on the 32 bkps or 64 bkps connections on the Internet but are now paying the Internet access monthly charge of $2.99.”
The plaintiffs claim monopoly price-gouging by Sirius XM in charges implemented since the two companies merged. The judge rejected the argument by Sirius XM that it was immune from the antitrust allegation because the Music Royalty Fee increase was approved by a regulatory agency, the FCC. He found that the FCC did not approve the rate increase, but rather got Sirius XM to agree to a one-year freeze on basic subscription rates following the merger, with the exception of adding the increase in the Music Royalty Fee. Besides, Judge Baer noted, the FCC had nothing to do with the other fees at issue.
“Strange as it may seem, Sirius XM has itself taken the position that the FCC has no rate-making authority over its rates,” the judge noted in rejecting the argument that the lawsuit was barred because Sirius XM was a regulated entity.
“We strongly believe that the merger that formed Sirius XM harmed consumers by eliminating healthy competition in satellite radio. We’re delighted that the court has cleared the way for subscribers to present to a jury their claims that the merger between the two legacy companies has restricted competition and injured consumers as a class, particularly in the wake of unchecked price increases,” said James Sabella, a director with law firm Grant & Eisenhofer, which serves as co-lead counsel for the class, along with law firms Milberg LLP and Cook, Hall & Lampros LLP.