XM-Sirius Merger Gets Help From Court Ruling

The proposed merger between XM and Sirius got a boost with the dismissal of an unrelated antitrust case brought by the Federal Trade Commission, according to The Wall Street Journal, which reported the legal reversal for the FTC on Wednesday. The issue for both the dismissed Whole Foods case and XM/Sirius is market dominance.

The antitrust suit attempted to block the merger of Whole Foods Market and Wild Oats Markets. However, a federal judge dismissed the FTC's claim, citing its too-narrow definition of the market where the deal is supposed to take place.

Essentially, the judge ruled that their merger would not constitute a monopolistic action in the larger context of the supermarket and grocery store industry. The FTC had argued that the relevant market definition was in fact a subset of that industry: the "premium and natural organic food markets."

The ruling becomes relevant to satellite radio because the grounds for dismissal cited by the federal judge hinge on the same issue as the Sirius-XM merger: the relevant definition of the market where the deal is taking place.



While opponents of the satellite merger, like the National Association of Broadcasters, argue that it would create a monopoly in a discrete satellite radio market, Sirius CEO Mel Karmazin contends that the definition of the relevant market includes all terrestrial radio, as well as MP3 players and streaming radio on the Internet.

In testimony to Congress, Karmazin cited the growing competition from these new media--which were virtually nonexistent when Sirius and XM launched--as reasons to allow the satellite broadcasters to merge. He argued that satellite radio is now "a small part of a highly competitive and ever-expanding market for audio entertainment."

The merger faced an uphill battle from the first, as the FTC's legal charters for the two companies include a specific provision that they never be allowed to merge. Karmazin has made the case for waiving this provision in testimony to Congress and members of the FTC and FCC.

Next story loading loading..