C3SR Study: XM-Sirius Merger Constitutes a Monopoly

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Washington - Mar 29, 2007 - On March 28, 2007, The Consumer Coalition for Competition in Satellite Radio (C3SR) sent a study to the FCC and the Department of Justice that demonstrates the proposed merger between XM and Sirius would create a monopoly and would therefore violate antitrust laws. The C3SR is a group dedicated to protecting the interests of the more than 14 million satellite radio subscribers in the United States.

The study was conducted by J. Gregory Sidak of Criterion Economics at the request of the C3SR. The study analyzes the likely competitive effect of the proposed merger. Sidak, a former Deputy General Counsel for the FCC, was asked to determine whether subscription-based satellite digital audio radio services are a relevant product market for antitrust purposes, and to assess the unilateral pricing effects of the proposed merger in the relevant product market.

One issue concerning the proposed merger is that satellite radio sees itself as part of the overall electronic media landscape that competes with terrestrial and Internet radio. The C3SR obviously disagrees. The NAB also states that the satellite radio merger would create a monopoly.

The study concludes that satellite radio services are a distinct antitrust product market and that a merger would be anti-competitive because it constitutes a monopoly. Even under broader definitions of monopoly, the report concludes that a merger would increase seller concentration ratios to unacceptably high levels.

In the end, the study says that a merger would result in efficiencies for XM and Sirius that would not benefit consumers, and that the conditions offered by XM and Sirius would not preserve consumer welfare. The study considered competition from other audio products, such as MP3 players and Internet radio, and determined that satellite radio is a distinct product market for antitrust analysis.

The study is available at the C3SR website at this link.

The C3SR was created by a group of law students at George Washington University in Washington, DC.

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