Washington think tank attacks satmerger


It is widely agreed that the proposed merger of XM and Sirius satellite radio companies faces high hurdles to get beyond antitrust concerns. It will therefore not come as good news to the two companies that the American Antitrust Institute has filed comments with the FCC urging that the proposal be shot down on monopoly concerns.

"[T]he applicants have not demonstrated that competition in satellite DARS is no longer in the public interest," wrote AAI's Richard M. Brunell. "On the contrary, competition between the Applicants has provided, and will continue to provide, significant benefits to consumers, whereas the public interest benefits of the merger are dubious. As long as the firms are likely to be viable without a merger, and satellite radio is not a natural monopoly, there is no good reason for the Commission to abandon its policy of ensuring competition in the delivery of spectrum-based services in satellite DARS."

AAI attacked the claim that subscribers could get the best of both, saying that this "…should have been already available to consumers if the Applicants had fully complied with the Commission's interoperable-receiver mandate."

Addressing the possible downsides, AAI said, "Conventional merger analysis indicates that the merger poses a significant risk of anticompetitive effects, including higher prices, reduced quality and reduced consumer choice."
Finally, AAI finds it inappropriate for the government to step in and enforce merger conditions to achieve results that should occur naturally in a competitive situation.

RBR observation: With generally deregulatory players like FCC Chairman Kevin Martin noting a steep climb to get this merger to completion, it can't help that so many organizations are laying down oil slicks on the upslope. The battle boils down to defining the market in which XM and Sirius operate, and Mel Karmazin's claim that it includes AM, FM, iPod, MP3, the internet and seemingly anything else that makes a noise doesn't seem to be getting many takers. Most see a market specifically built for two at its birth, and they see that two into one is a monopoly, and they almost always recommend that this remain an undone deal.