A combined XM-Sirius is one step closer to becoming a reality. The Department of Justice (DOJ) on Monday approved the merger of the two satellite radio companies, shooting down the assertion that the combination of XM and Sirius would create a monopoly: A merged XM-Sirius will not substantially lessen competition or harm consumers, the DOJ's antitrust division said in a statement.

The companies will not be able to unfairly increase their prices due to "a lack of competition between the parties in important segments even without the merger; the competitive alternative services available to consumers; technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers," according to the DOJ.

XM and Sirius announced in February 2007 that they would merge in a stock swap worth $13 billion, including net debt of $1.6 billion.

The National Association of Broadcasters (NAB) was less than enthused.

"We are astonished that the Justice Department would propose granting a monopoly to two companies that systematically broke FCC rules for more than a decade," NAB executive vice president Dennis Wharton said in a statement. "To hinge approval of this monopoly on XM and Sirius's refusal to deliver on a promise of interoperable radios is nothing short of breathtaking."

"XM and Sirius are unique in their ability to provide portable radio service on a nationwide scale to geographically dispersed audiences," NAB says on a Web site dedicated to blocking the merger. "Local radio stations do not have a nationwide reach, and iPods only allow users to play music from their own collections. There is no competitor to XM and Sirius in the satellite radio market."

The DOJ said that because users of XM and Sirius "must acquire equipment that is specialized to the satellite radio service to which they subscribe, and which cannot receive the other provider's signal, there has never been significant competition for customers who have already subscribed to one or the other service."

Because of long-term, sole-source contracts that give auto manufacturers incentives to install specific radios in their new vehicles, "There is not likely to be significant further competition between the parties for satellite radio equipment and service sold through this channel for many years," the DOJ concluded.

Sen. Herb Kohl of Wisconsin, chairman of the Judiciary subcommittee on antitrust, competition policy, and consumer rights, said in a statement that he was "very disappointed" that the DOJ did not block the merger. He echoed NAB's concern that the merged company would "create a satellite radio monopoly" and that it is "contrary to antitrust law and the interests of consumers."

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