Department of Justice OK with XM-Sirius Merger

The Justice Department said the merger of XM Satellite Radio and Sirius Satellite Radio will not be anticompetitive, clearing the way for the merger if the Federal Communications Commission follows suit.

In a key finding, Justice concluded that satellite was part of a larger audio market rather than its own exclusive niche.

" In the retail channel, where the parties likely would continue to compete to attract new subscribers absent the merger," it said, "the division found that the evidence did not support defining a market limited to the two satellite-radio firms that would exclude various alternative sources for audio entertainment, and similarly did not establish that the combined firm could profitably sustain an increased price to satellite-radio consumers."

The agency continued, “After a careful and thorough review of the proposed transaction, the division concluded that the evidence does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition and that the transaction therefore is not likely to harm consumers. The division reached this conclusion because the evidence did not show that the merger would enable the parties to profitably increase prices to satellite-radio customers for several reasons, including: a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers."

The move had been strongly opposed by broadcasters, which argued that allowing the two companies to get together would create a monopoly in satellite radio, while the companies had said that they would simply be a stronger competitor in a crowded audio market that included cable radio, terrestrial radio and the Internet.

Justice usually coordinates merger reviews with the FCC, whose chairman, Kevin Martin, has said that he hoped to be done with the review by the end of this month. Martin has said tjat the merger had a high hurdle to overcome, but the companies' offer of a la carte channels was a positive sign.