Competitive Enerprise Institute Offers Strong Stance On Merger
The American Antitrust Institute reiterating their anti merger stance a few days ago, and we covered the issue on February 20th in our article titled “Antitrust Institute Urges DOJ To Block Merger”. The AAI stance received some press, and there are some who wonder what stances that counter this argument. Our story highlighted several contrasting opinions. The crux of the AAI argument rests on a narrow market definition that encompasses only SDARS. The AAI stance fills in their argument based on the narrow definition model. Without a narrow market definition, the AAI stance carries little weight.
That article was about my opinion vs. that which was outlined by the AAI. I am not an antitrust expert, but have followed satellite radio as well as the merger for quite some time. My opinion centers around what I believe the audio entertainment is, and how consumers interact with the various entities that deliver audio entertainment. With that being said, many may wonder if there is a more “experienced” or seasoned opinion on the proposed merger that counters what the AAI is stating. There is. The Competitive Enterprise Institute is one such organization, and their stance is that the merger should be permitted to happen.
In their own FCC filing back in July of 2007, the CEI took to task the assertions made by the AAI.
CEI brings to center stage what they term as “market definition hi-jinks”. They outline where those that desire a narrow market definition are coming from, but then also highlight why such an argument is moot or not necessary. Many qualities that satellite radio has are a direct result of a response to a segment of the market that did not exist before. Those that seek a narrow market definition point to the national footprint of satellite radio. The CEI points out that along with satellite have come many other methods of getting content to consumers on a national scale. The list grows all of the time.
For sector watchers, understanding both sides of the coin is valuable. I would recommend reading both the AAI stance and the CEI stance. Look at what each is saying. Apply what is being said to the market place. Which institute delivers the more realistic argument? Which institute captures what is really happening in audio entertainment? Even upon getting these answers, it is no guarantee of the merger outcome, but knowing the various positions can at least make one more informed.
[ AAI Position vs. CEI Position ]
Position – Long Sirius, Long XM
I asked you to cite antitrust experts, and you come up with this?
The CEI position is nothing more than a rant against antitrust enforcement.
They take the “broader market” definition beyond ANY reasonable grounds and claim that since XM/SIRI are distributing “information”, there can be no monopoly under any circumstances:
“But media companies—including those supplying “digital audio radio services” (shortened to DARS)—are conduits for information of every sort, and as private parties, they cannot monopolize it. Monopoly in information is impossible in a free society whose government does not practice censorship.
What a dumb argument. Surely, even YOU can see this claim makes no sense!
But even THEY clearly believe AAI is correct on the legal issue:
“… if one wants to find legal precedents to block it, that can be done.”
Thus, while the law makes it clear that the merger should be blocked, CEI believes otherwise.
This is someone’s opinion, but it isn’t a legally-grounded view of an expert in antitrust law. In fact, that opinion carries not one iota more weight than yours or mine.
The AAI’s opinion is totally supported by existing antitrust law.
I will say this much: If Congress changes the Antitrust Law, wants to repeal the statutes that enable the enforcement, so be it. But if we’re going purport to have antitrust enforcement, you simply cannot get around the fact that a merger between XM/SIRI is the most egregious in recent memory.
Once again, if you can find an example of independent antitrust experts (that would be attorneys who specialize in antitrust matters, as do the people at AI) who believe this merger should go forward on the basis of existing antitrust law, I would very much like to see it.
If any antitrust “expert” including aii defined the market properly they would claim that there is not antitrust issue at all. This is not about any antitrust expert leaning one way or the other, all they can do is interpret the law. Your argument doesn’t make sense since no one thinks aii is wrong given the definition of the market they are using…once which is blatantly obviously wrong.
The only thing you should be discussing here is the definition of the market being used since that is the ultimate basis of anyones opinion/argument BUT you cant do that because anyone else opinion of the market that is not your own is “dumb” and having a discussion with you is IMPOSSIBLE.
When countless people think you act like an idiot when do you stop and look in the mirror? People who are for or against the merger along with people who are fans of Sirius or fans of XM all think you come across like a raving lunatic….they must ALL be dumb?
>>> This is not about any antitrust expert leaning one way or the other, all they can do is interpret the law.
Exactly. And what determines the market definition? The law.
>>> When countless people think you act like an idiot when do you stop and look in the mirror?
I take into consideration that the vast majority of people on these threads are Sirius shareholders (Siriots), and thus, by definition, don’t comprehend the subject matter.
Frontmed…
This is yet another example of you not wanting to look at the entire picture.
The entire AAI argument hinges on a narrow market definition.
The law requires a look at the relative market. AAI interperits that market narrowly. This does not mean that the law is on their side.
Your selective quoting of the CEI stance is humorous and a shining example of how narrow minded you are being. You do not even complete the quote or the thought being offered.
You quoted only, “if one wants to find legal precidence to block it that can be done.” You left out…”But that is not the same as an exercise in safeguarding consumer welfare”
The entire quote, TAKEN IN CONTEXT, carries a differing meaning than what you are trying to insinuate.
There are instances in antitrust hisory where narrower markets have been defined, but there are also instances where broader markets are defined.
You state that the AAI argument is supported by existing antitrust law. It is not. It is only supported by existing law if a narrow market definition is applied. Therin lies the issue, as I have been stating for quite some time.
>>> It is only supported by existing law if a narrow market definition is applied.
The entire issue is about “market definition”. That is all that matters. And the AI’s original comment clearly discusses the issue.
What you seem to not be comprehending is that existing law is what determines the “market definition”. Under existing law, the market MUST be defined narrowly. The Staples case is absolutely on all fours with the XM/SIRI case; a more perfect example could not be dreamed up in a million years.
You seem to not grasp the point that the courts make Antitrust law by interpreting the statute and setting precedent, and the existing precedent calls for a narrow market definition. What Karmazin is attempting to do is to take advantage of the political environment to prevent DOJ from challenging the case. If it is challenged, and DOJ pushes it, they simply don’t stand a chance in a court of law. And that is, I believe, what the AI paper conveys.
Where are the citations for cases that SUPPORT the broad market definition for XM/SIRI?
If one reads the AI’s paper, it is loaded with AUTHORITATIVE citations to current law. When you read CEI’s paper, there is NOT ONE authoritative citation. You have citations to newspaper articles, unauthoritative testimony, Sidak’s hired-gun analysis — but not a single citation to any legal precedent.
This is the high hurdle for the merger to overcome. The authoritative legal precedent on the subject is clear; and somehow, XM and SIRI have to convince the DOJ (and perhaps one or more courts of law) to ignore that precedent in favor of opinion pieces put forth by XM and Sirius.
Before any of this precedent matters, DOJ must challenge the merger; if they don’t, then the legal precedent is without meaning. The entire game plan here is to convince DOJ not to challenge it, because if it goes to court, the merger has zero chance, since the court will follow the law.
You failed to acknowledge what was previously said by Tyler.
>>>You quoted only, “if one wants to find legal precedence to block it that can be done.” You left out…”But that is not the same as an exercise in safeguarding consumer welfare” The entire quote, TAKEN IN CONTEXT, carries a differing meaning than what you are trying to insinuate.
Looks to me like you have been reduced to taking things out of context to make an argument at this point.
Frontmed….
You state, “under existing law that the market must be defined narrowly”
Existing law does not dictate that the market be defined narrowly.
Precedence is available. You cite Staples. Some one else can cite Whole Foods.
The staples case has points, but does it really correlate with Sirius and XM? Only if you start with a narrow market definition, which is what you and AAI have done. In Whole Foods a wider market was argued successfully.
Legislators make law, courts apply the law.
McDonald’s, Burger King and Wendy’s???
Would a better example be White Castle merging with Jack In The Box?
Face the facts here. The market definition will determine how the law is applied. You want to believe that other forms of audio entertainment are not substitutable. All existing data goes against your position.
Damn Tyler I was going to site the Whole Foods Wild Oats merger. In which the FTC lost because they thought as narrowly as FrondMed does on this merger the judges basic comments were; the FTC had to widen their concept of what the market was. It is also, what I believe is taking so long to make a decision. The DOJ does not want to lose another case that would set prescient, on what might very well be a crap shoot. That FrontMed is why the decision is made by the people in charge and not by the people who work under them.
>> Looks to me like you have been reduced to taking things out of context to make an argument at this point.
Nonsense. The point was made that legal precedent exists to block the merger. In the context of this post, the entire argument has been about whether DOJ should or should not approve the merger, which is a LEGAL question, NOT a question of safeguarding consumer welfare, which is much broader in scope.
Apparently, it is YOU who is reduced to taking points out of context.
>> Precedence is available. You cite Staples. Some one else can cite Whole Foods.
I think you mean “precedent”.
I believe the Whole Foods case is currently before the DC Court of Appeals. It might be wise to avoid citing it as “precedent” until such time as the outcome of the appeal is known. The FTC may have a stronger case than you think.
>> The staples case has points, but does it really correlate with Sirius and XM?
Staples is precisely on-point with XM/SIRI. Rather than reiterate it here, creating a lengthy blog page to further irritate Charles, if you care enough to understand it, the details were set out at orbitcast:
http://www.orbitcast.com/forum......php?t=564
>>> Legislators make law, courts apply the law.
Ha. what is “case law”?
>>> McDonald’s, Burger King and Wendy’s???
>>> Would a better example be White Castle merging with Jack In The Box?
I asked the question. Is there some reason you don’t want to answer? If so, just say you’d prefer not to answer it.
>>> All existing data goes against your position.
Actually, there is a lot of “existing data”, but very little of it is “relevant” to the decision, and that which IS relevant, is totally supportive of my position. Which is the reason my position is what it is.
Look, I stand to profit from the merger and will lose money if the merger fails. But none of that has anything to do with what the correct outcome is. I’m realistic — there is a 50/50 shot the DOJ will decide not to challenge the merger — but it will not have been on the legal merits if they make that decision, it will have been on political grounds. That’s the only real argument I’ve made here.
>>>Actually, there is a lot of “existing data”, but very little of it is “relevant” to the decision, and that which IS relevant, is totally supportive of my position. Which is the reason my position is what it is.
The fact is that you have no idea what is relevant to anyone making the decisions. On top of that you have no idea how anyone who makes decisions perceives the information you think is “totally supportive of my position.”
If the people who make this ruling decide that the market is in fact wider than your narrow definition… isn’t that all that matters? Please try to not forget that what you think about this whole merger process means nothing to anyone involved in it.
Yes it is “precedent” you are right on that. You see its not so hard to admit when your wrong. You are wrong on the FTC filing a appeal, they have declined to do so. The FTC did not say they “were” or “were not” going to but that if they were, they would have to file an injunction to stop the merger. That did not happen and the two have already merged. In my opinion they did not want to take a chance, and make a prececent already set now, even stronger by backing it up with any additional loss.
Frontmed.
The whole food Wild Oats merger is complete. Once again, you are likely not familiar with this because it does not match up with your stance. AAI avoided any discussion of it as well. HMMMM
Most sector watchers, analysts, and antitrust watchers believe that if politics gets involved it is a bad thing for the merger chances. Many cite that on its merits the merger should be approved.
You asked whether the DOJ should get involved if McDonald’s Burger King and Wendy’s decided to merge. I answered by stating that White castle and Jack in the box would be a more appropriate example. I did not avoid the question, I clarified it with what I thought a more appropriate example. If you are trying to get to a certain point why not get there?
Now that we have established that Whole Foods and Wild Oats is indeed precedent, you can see that there is legal standing to support the merger.
My biff the FTC did ask, but was turned down by the Washinton appellate court Oct. 25th.
>>> The fact is that you have no idea what is relevant to anyone making the decisions.
By law, the decision at DOJ rests solely with the assistant AG in charge of the Antitrust Division — Barnett. It is his and his alone to make. It is a decision that is based largely on existing law (although, as in the Whirlpool case, he may decide there are compelling legal reasons outside the purview of his staff recommendation).
Barnett’s public remarks and those of his subordinates make clear what he does and does not consider relevant in these decisions. I do have a pretty good idea what he considers to be relevant — if he can be taken at his word.
>>> If the people who make this ruling decide that the market is in fact wider than your narrow definition… isn’t that all that matters?
It isn’t “people”, it is a “person”.
No, it isn’t all that matters. It is pretty clear that the staff will recommend against the merger on the basis of the narrow market definition, because the staff will follow existing law (including case law) under which the narrower definition is well established.
Barnett may ignore the recommendation but do so for reasons other than “market definition”. Or he may decide that the staff conclusions about market definition are incorrect. So, it isn’t just about market definition, but that IS, presumably, a significant legal issue. But existing case law sets out a plethora of considerations, any number of which could come up in the context of the decision.
>>> The whole food Wild Oats merger is complete. Once again, you are likely not familiar with this because it does not match up with your stance.
You sure about that? LOL.
http://www.ftc.gov/os/caselist.....fbrief.pdf
>>> Now that we have established that Whole Foods and Wild Oats is indeed precedent
Even if the outcome was final (and it isn’t, until the DC Court of Appeals makes its decision), whether it serves as legal “precedent” is a much more complex issue than just “who won the case”. Decisions of lower courts are not binding on higher courts.
You might want to read up on the concept of stare decisis.
If there is any binding precedent from the Whole Foods case, it won’t be known until the DC Court of Appeals makes its decision.
Once again unreal, “The the three-judge panel of the Appeals for the District of Columbia Circut, in a brief ruling, agreed that the FTC “raise some qustions” about the deal, but the judges said the agency had not proven that Friedman’s decision was flawed.”
“Friedman rejected the FTC’s arguement that merging the two organic grocery chains would substantially reduce competition, noting that about 60% of natural and organic food sales come from conventional stores. He argued that supermarket chains such as Safeway and Kroger are selling more fresh and organic produce and redesigning many of their stores to compete with Whole Foods.”
Forbes Magizine, Carl Gutierrez
His contention is that another court is going to bother with this, after two other courts have rejected the FTC claim, and the merger is now done and cant be undone is ridiculous. It is hard to get any ruling overturned and gets progressivly harder with each one that gos against them. The fact is judges dont like over-turning other judges rulings.
>> His contention is that another court is going to bother with this
First of all, it isn’t “another court”. Secondly, nobody has made such a contention. You and Tyler claimed the case had been settled and created a “precedent”, and I merely pointed out that you are both wrong. You could just say, “Oops. I made a mistake”. Instead, you start rambling about a subject you quite obviously know nothing about.
I would also point out that this appeal is a totally different animal from the request for injunction that was filed shortly after the District Court’s decision.
Whether Whole Foods has value as a precedent depends upon many factors, one of which is the outcome of the appeal which hasn’t yet been decided.
Whether the merger has been consummated will be of little, if any, consequence in the Court’s decision. If they will break up AT&T, they certainly aren’t going to be worried about whether Whole Foods can undo its little deal.
It is not insignificant that FTC (a different agency from DOJ, I might add) has chosen to make this appeal. Even if they believe they will lose, they are not acquiescing. And this case is not nearly so clear-cut as the XM/SIRI instance (in which a monopoly is formed, rather than a mere reduction in the number of players).
I have made no claim about what DOJ will or will not do. I am simply pointing out yours and Tylers mistakes.
Frotmed…
First – The matter regarding whole foods has become a precedent. The FTC can choose to keep marching on if they so desire, but each loss they suffer further strengthens the precedent being set.
Second – You insinuate that I stated the the Whole Foods case was settled. What I stated was that the merger is complete.
Third – Precedent was set with the initial case. You can not simply ignore this. It also sets a tone for how the DOJ and FTC look at other mergers
Fourth – You state that the XM SIRI merger is a monopoly. The DOJ will make this determination, and it boils down to the market definition. A wider definition is a reduction in the number of providers. This can not be ignored despite your desire to ignore it.
Mistakes with this issue have not yet been established. If the market is defined narrowly then I will have been mistaken in how I felt the DOJ would act. If they define it more broadly then you will have been wrong in assuming a narrow definition would be used.
My belief is that consumers use many mediums to obtain audio entertainment. I think this is the case. Only 5% of the radio world is satellite. 95% of the people are getting their audio entertainment from other sources. That data substantiates this.
Just today I saw the new Nissan Murano add which mentions iPod and not satellite, not AM, not FM, not anything else. Nissan is making it a major point in the Murano add to let consumers know that the new Murano has iPod controls “just like an iPod”
Technically the injunction appeal and the appeal to over turn Judge Freidmans ruling are different. But one is directly linked to the other, if the appellate court thought that there was a chance that Freidmans ruling would be over-turned they would have granted the injunction. They would want to stop the one thing the case was about the combination of two companies breaking Antitrust law. Next it has been settled, hence why Whole Foods and Wild Oats were able to merge. It also can be considerd precedent, at this point in time. A ruling has been made and as of yet, has not been over-turned (strong precedent no not yet, but it gets stronger with each court decision that denies the FTC.). Another thing, I have quite a bit of knowledge of the AT&T break up (my father was a CEO of AT&T at the time). The government did not force them to break up if they stayed as is, AT&T wanted to get into the computer business (the purchase of NCR all be it a bad choice, when they were also considering Microsoft). The government made them make a choice break up and get into the computer business or stay together and stay out of the computer business. Now it is not to say that the government was not looking for any reason they could find to break them up. Now for you to assert, that after a ruling has been made a injunction to stop the merger has been denied, that the court is going to break them up, you are crazy. That is why the deniel of the injunction is directly linked.
Damn Tyler if I didnt have to feed my kid I would have beat you.
>>> The matter regarding whole foods has become a precedent.
>>> Precedent was set with the initial case.
Could you please list one case that cites on Whole Foods as precedent (I am assuming a brilliant legal mind like yourself would have a citator handy, right?).
Frontmed….
Are you really going to walk down this path?
The Whole foods case very new yet. That does not mean that it will not be used a precedent. Come now, do you think that this case will be ignored?
If the Sirius and XM merger takes a similar course to the whole foods merger you will be the first one shouting about the similarities for the DOJ appeal!!
You know, the part where the FTC argues that the Wild Oats brand is still distinctive, and that the stores are still open, so the merger can be reversed.
You believe in a narrow market definition.
I believe in a wider market definition.
I really don’t have anything to add on this subject; I think my argument is pretty well self contained, so you take the last word.
FrontMed must not remember when the first case against the tobaco companies was won. It was on all the news and all the legal experts were saying it was terrible for them because it now sets precedent for everyone to file suit. That was the same day the ruling came down no other suits were filed yet citing it as a precedent.
Tyler, there are at least 5 (Wild Oat) stores that have already been closed, and another 2 that are in the process, if not already closed. For FrontMed to think that a court is going too tell a company they have to break up after it told them to proceed is nuts. Also as FrontMed said it is the same district court, so he thinks they will change their minds on Friedmans ruling. That is what they based the deniel of the FTC’s injunction on (the FTC had not proven his decision was flawed). It is the same thing they will be fighting about on the appeal. Once again why the injunction case is directly linked.
He is in such a minority in his thinking, WFMI did not drop more then a few cents for the day, when this news came out about the FTC filing its appeal. So everyone else thought it to be insignificant. One would think that if there was a chance in hell the company had a slite chance of possibly being effected like that, it would have dropped a lot more then a few cents. Lets face it we all know stocks move much much lower on far less risk.
John
While I have nothing else to add on the subject, there are a couple of points in your remarks that are blatantly incorrect.
1) The current appeal is not to the District Court, but to the DC Circuit Court of Appeals. I would think this should be rather obvious.
More importantly, in its order dissolving the injunction, the DC Circuit said, “Although the FTC has raised some questions about the district court’s decision, it has failed to make a “strong showing that it is likely to prevail on the merits ….” The FTC must show that the district court … abused its discretion”. At this stage, the FTC has failed to meet that burden.
2) The DC Circuit NEVER told Whole Foods to proceed with the merger, or anything of that sort. What they did was refuse to stop it, a totally different thing. They had no responsibility to consider, and did not, whether Whole Foods would or would not proceed with the merger on the basis of their order to dissolve the injunction. Simply put, this is just not the Court’s problem.
I doubt any of this has ANYTHING AT ALL to do with the XM/Sirius merger. So, I think Charles would be justified in shutting down this discussion at this point.
Still, if someone comes here with a fairy tail, I’ll probably post to oppose it.
FrontMed you are right about it being Circuit, that was my misprint.
FrontMed that is one of the most ridiculous things I have ever seen, talk about spilting hairs, we are well passed that were talking atoms now. The injunction was asked for to stop the merger. The court said no we are not going to stop it (they have a right to merge). The court gave the permission to merge, regardless of the atoms you want to split here.