Collaring Markets into a Chokehold

Greg’s post on the Whole Foods/Wild Oats merger brings to mind another pending merger: that between satellite radio firms XM and Sirius, which, while substantially different, is being opposed on a similarly overbroad definition of the relevant market.

In comments submitted to the Federal Communications Commission, the National Association of Broadcasters, which opposes the merger, argues that “the proposed merger would permit a single licensee to hold 100 percent of the available spectrum allocated to satellite DARS [digital audio radio service],” and that, “the relevant product market for purposes of the Commission’s analysis of the proposed merger is the market for satellite DARS.”

This is, of course, ridiculous, since the relevant market here should be broadcasting, not one of a variety of technologies used for that purpose. As for the amount of DARS spectrum allotted to XM and Sirius, there are regulatory fixes for that (if one concedes that’s even a problem), from allotting more spectrum to requiring the merging companies to give up some of their licensed frequencies.

A definition as narrow as what the NAB wants would tighten antitrust into a suffocating regulatory straitjacket, and ignores the competitive possibilities from technology substitution (e.g. land-line vs. mobile telephony).