Corporate & Securities Law

Comment on “Barnett on Sirius-XM”

I can’t seem to get my comment on Geoff’s XM-Sirius post below to go through, so I’ll just post it:

I would still disagree with the DOJ when they say “there is not likely to be significant competition…through the car manufacturer channel for many years.”  As mentioned, the exclusive contract is competition.  Even though they aren’t negotiating new contracts now, the competitively agreed upon prices and rebates are still in effect through 2012.  That doesn’t end competition, it extends it.  In addition, if there was no merger in the future and both companies were still in business when 2012 rolled around, they would again compete for the exclusive contracts.

I think the DOJ made the right decision.  However, I would have said that even though some aspect of competition for auto manufacturers between the two companies would end due to the merger, in general the relevant market is much broader than just satellite radio (which is the most important factor).

Also, why would the DOJ make it seem like it matters that there’s no evidence that competition between XM and Sirius affect’s customer’s choices of which car to buy?  Even if no customer would ever choose one car over another on the basis of its satellite radio, XM and Sirius would still compete for the customers each auto manufacturer “controls” (term used loosely).  This is similar to competition for grocery store shelf-space (either exclusively or non-exclusively) to acquire the consumers each respective store “controls.”  Our resident Mr. Shelf Space, can tell me whether he agrees or disagrees.

Full post as published by Truth on the Market on March 25, 2008 (boomark / email).