It looks like Sirius-XM is now contemplating bankruptcy (HT: Danny Sokol). There were quite a few critics of the Bush administration’s decision not to challenge the merger. Various antitrust commentators and critics (as well as rivals like the NAB) lined up on the side of enforcement, arguing that the merger would lead to a monopoly in the satellite radio market and hammering the administration for its failure to challenge. The DOJ defended its decision in a press release with distributors (automakers) also coming to its defense.
One obvious testable implication of the theory that the deal would create a merger to monopoly (in whatever relevant antitrust market you’d like) is that the post-merger firm would earn monopoly profits. Of course, one of the challenges of retrospectives is that conditions change in the post-merger world. That’s obviously the case here. However, that does not mean that one can’t analyze whether the rate of return earned by the post-merger firm is consistent with the anticompetitive theory. I wonder if the critics of the DOJ decision not to challenge this merger would view a post-merger bankruptcy as inconsistent with their theory?
For those interested in some antitrust analysis of the merger, you might be interested in checking out the conference on Merger Analysis in High-Technology Markets that my colleague Thomas Hazlett and I put on at George Mason University on behalf of the Information Economy Project. While the entire conference was filled with some really nice papers, forthcoming in the Journal of Competition Law & Economics, the third panel features competing analyses of the Sirius-XM merger by Tom Hazlett (link to paper here) and J. Greg Sidak. You can access the papers at the same link or listen to the audio on iTunes here.