The proposed merger has been making lots of waves in the press as of late, including a Congressional hearing (Antitrust Review has links to all the hearing testimony) but not much serious grappling with the antitrust issues. I even read today that John Ashcroft has chimed in. Of course, it is very difficult to do much serious analysis about likely competitive effects without more information than is available publicly.
In any event, the WSJ has an informative exchange between Mark Cooper of the Consumer Federation of American and Donald Russell of Robbins Russell with the former arguing the merger will be anticompetitive and the latter challenging the standard arguments offered in favor of that proposition. It is a fairly entertaining read and a good summary of the antitrust arguments likely to be raised by the parties for those that are interested. My own take on this exchange: advantage Russell. Here’s an excerpt:
Antitrust lawyers often use a simple rule of thumb — if competitors oppose a merger, it’s usually good for consumers. And here, the AM and FM broadcasters, through their trade association, the National Association of Broadcasters, are opposing the merger very strongly. It’s hard to see any reason they would do so, other than the obvious reason: A concern that a merged company will take more listeners away from the broadcasters than XM and Sirius would be able to do as separate companies. In other words, that the merged company would offer a service that would be more attractive to consumers than the services they’re currently getting from XM and Sirius. So the first question I have for Mark and other merger opponents is this: If satellite radio doesn’t compete with AM and FM radio, why is the NAB fighting so hard to stop this merger?
My colleague Tom Hazlett made a similar point regarding the NAB efforts in a Miami Herald story (registration required) a few days ago:
If you’re an anti-trust enforcer and you see that all the competitors are banding together to oppose a merger in the name of “public interest,” it’s pretty easy to figure out that the truth is exactly the opposite.
This merger is an example I have discussed from time to time in my antitrust courses over the past couple of years, and one that may potentially raise some pretty interesting issues depending on the way the facts play out. Should be fun to watch.