XM/Sirius Merger Apporved by Justice Department
The Justice Department has officially givem approval for the merger of the two major satilite radio rivals, XM and Sirius, which, combined would result in a 17 million subscriber “de facto” monopoly (Shendon, 2008)
The Jutice department, which is responsible, in this case, for evaluating any anti-trust implication that this merger could potentially pose, determined that the merger would not likely result in higher prices due to the elimination of competing companies in the satellite radio business. The reasoning behind this was that satellite is not the only competitor for providing programming due to MP3 players and HD Radio emerging as mobile audio alternatives. (Shendon, 2008)
Now that XM/Sirius has the blessing of the Justice Department, the merger only needs the approval of the Federal Communications Commission (FCC) in order to go through with the deal. The FCC has never turned down a deal that was approved by the Justice Department, but the final decision by the FCC is likely to take several weeks. (Leiberman, 2008)
Anti-trust head, David Barnett believes that customers will not be negatively affected, saying, “A price increase is not going to cause you tjump to the other service, so there’s just not competition to day that would be eliminated by the merger.” This merger would be enough to help both companies achieve sustainability, the stock prices of each company rose, as investors experienced increased hopes for both companies with the likelihood of the merger going through successfully looking increasingly more likely (Leiberman, 2008).
Sources:
Leiberman, D. (2008, March 25). Justice Dept. OKs Merger of XM, Sirius; Now it's up to FCC. USA Today , p. P. 03b.
Shenon, P. (2008, March 25). Justice Department Approves XM Merger with Sirius. New York Times , p. P. B5