In a stunning announcement yesterday, The Competition Bureau of Canada said that it does not intend to make an application to the Competition Tribunal to challenge the proposed acquisition of Sirius Canada by XM Canada under the merger provisions of the Competition Act.
The bureau says that it has given the matter a thorough review and "concluded that the proposed transaction would not likely give rise to a substantial lessening or prevention of competition."
In conducting its review, the Bureau says it collected information from Sirius Canada, XM Canada, retailers, automobile manufacturers and the U.S. Department of Justice Antitrust Division in order to form its decision. While the bureau held discussions with all the market participants who sell and profit from selling subscription satellite radio hardware and services, it appears the federal watchdogs did not hold hearings with satellite radio customers or discuss with consumer groups the impact the merger would have on Canadian consumers.
In its position statement , the bureau concluded that XM and Sirius Canada, the only two firms in Canada who sell subscription satellite radio service were, in fact, not “close substitutes”, a euphemism for competitors. The bureau also rationalized the acceptance of the merger because, based on the evidence provided by sellers, it was "rare" for consumers to switch from XM to Sirius or vice versa therefore there was no competition between the two services.
The position statement noted that, despite XM now having a complete monopoly on subscription satellite radio services, "the proposed transaction would not likely have a substantial impact on existing subscribers."
The conclusion that: it was rare for satellite radio users to switch between services; and that prices were unlikely to increase when a satellite radio monopoly was created is the antithesis of what XM and Sirius subscribers have been telling Digital Home for years. It also seems to defy the very notion that monopolies are anti-competitive.
Over the last five years, many Digital Home readers have told us that they subscribed to both XM and Sirius Canada satellite radio offerings which disproves the Bureau’s conclusion that switching between services is rare. Our website members tell us they routinely cancel their subscription to one satellite radio service in order to get a better short term deal with the other.
The bureau's conclusion that price increases will be kept in check is also suspect considering the recent feedback Digital Home has received from its readers who tell us that XM and Sirius Canada have already begun to raise annual subscription prices by eliminating the lucrative retention deals they have been offering for years.
Customers tell Digital Home that when they have called in to renew their satellite radio service, Sirius and XM Canada have quoted them annual renewal subscription rates of between $120 and $200 per year, up from between $60 and $120 in previous years.
The XM and Sirius Canada merger must still be approved by the CRTC.
Discuss the Sirius and XM Canada merger in Digital Home's Sirius XM Satellite Radio forum .