“The competition between XM and Sirius forced each company to differentiate their product to attract listeners,” Doyle wrote in a May 22 letter to the FCC, Justice Department and Federal Trade Commission.
Without this “competitive force,” he said, the combined company would not be required to improve its offerings.
In a statement released today, the Justice Department’s antitrust division said a “careful and thorough review” of the evidence “does not demonstrate that the proposed merger of XM and Sirius is likely to substantially lessen competition,” and that the combined service “is not likely to harm consumers.”
Antitrust officials decided that the merged company would not be able to substantially increase prices to satellite radio customers because of alternative products on the market.
“Alternatives” besides so-called terrestrial (AM-FM) radio include Internet broadcasters and services that provide music over cellular phones, according to the Justice Department.
Perhaps the most surprising part of the ruling is the Justice Department’s decision that the merger will not harm competition because the services are not competing with each other.
Because XM and Sirius satellite receivers aren’t compatible, in the Justice Department’s opinion, consumers who purchase one type are not likely to switch to the other service.
The FCC ordered XM and Sirius to develop receivers that can be switched between the two services, but as Doyle noted in his letter almost a year ago, such radios are still not available.
The National Association of Broadcasters called that part of the ruling laughable.
“We are astonished that the Justice Department would propose granting a monopoly to two companies that systematically broke FCC rules for more than a decade,” said NAB Executive Vice President Dennis Wharton in a prepared statement. “To hinge approval of this monopoly on XM and Sirius’s refusal to deliver on a promise of interoperable radios is nothing short of breathtaking.”
After more than a year of study, the U.S. Justice Department has given its official OK to the merger of rival satellite radio providers XM and Sirius.
The Federal Communications Commission must still rule on the merger, but as one analyst told the Reuters news agency, Justice’s approval makes it unlikely that the FCC would rule differently.
The merger was opposed by traditional AM-FM radio stations and some members of Congress on grounds that the merged service was a monopoly that would stifle competition.
Among the congressmen against the XM-Sirius merger is U.S. Rep. Mike Doyle, a Democrat from Forest Hills.
Doyle is a member of the House Energy and Commerce Committee, and is the vice-chairman of the subcommittee on telecommunications and the Internet.