Contact

Click here for a confidential contact or call:

1-212-350-2774

Sirius XM Radio Subscriber Attacks Merger, Claiming Prices Now Go To 11

Posted  December 17, 2009

A subscriber in Florida is suing Sirius XM Radio, challenging the 2008 merger of the two satellite radio services with allegations of deceptive and excessive pricing.

The private suit claims that despite the commitments Sirius and XM made to the Department of Justice and the Federal Communications Commission as a condition of merger approval, the combined firm has raised prices above competitive levels.

Both the DOJ and the FCC conducted reviews of the merger of XM and Sirius – the two companies licensed to provide satellite digital audio radio service under FCC licenses. The licenses originally prohibited the two companies from merging.

The DOJ ended its investigation on March 28, 2008, concluding that satellite radio service was not a relevant market such that the merger would create a monopoly. The DOJ noted that many people subscribed to XM or Sirius for programming that the other did not have, such as Major League Baseball and Howard Stern. For these customers, the two services were not close substitutes for each other. The DOJ also concluded that the merger would bring efficiencies, mostly in the form of cost savings.

The FCC’s review, however, was slightly broader than DOJ’s, since the FCC reviews broadcast license transfers based on the “public interest, convenience, and necessity,” and is “informed by, but not limited to, traditional antitrust principles.” The FCC found that the merger could potentially cause competitive harm, and approved the merger only after the parties made certain commitments. The companies agreed not to raise the prices of their basic service packages above current levels for 36 months following the merger, except in the case of certain cost increases.

As we discussed last month on this blog, there is no statute of limitations on challenges to a merger under Section 7 of the Clayton Act. Nor does approval by regulators confer immunity from private suits. The lawsuit filed by Carl Blessing in the U.S. District Court in Manhattan claims that the merged company raised the rate it charges for multiple radios on the same subscription, and that other rates were excessive. Blessing asserted that satellite radio is a relevant market, claiming that its national reach and portability made it “superior” to other forms of music programming.

Tagged in: Antitrust Enforcement,

Newsletter

Subscribe to receive email updates from the Constantine Cannon blogs

Sign up for: