When is a monopoly not a monopoly?

What does satellite radio have in common with high-end organic supermarkets? Well, for one thing, most people seem to find them both overpriced.

But now it turns out that they may have similar anti-trust profiles, which is to say, slim enough profiles to pass muster at the U.S. Federal Trade Commission.

Media Daily News reported last week that "the proposed merger between XM and Sirius got a boost with the dismissal of an unrelated antitrust case." The unrelated case was the merger of Whole Foods Market and Wild Oats Markets, two of the largest whole/organic foods supermarkets in the country.

The FTC had gone to court to block the merger on anti-trust grounds, and last week a district judge dismissed the case.

Essentially, the judge ruled that their merger would not constitute a monopolistic action in the larger context of the supermarket and grocery store industry. The FTC had argued that the relevant market definition was in fact a subset of that industry: the "premium and natural organic food markets."

The ruling becomes relevant to satellite radio because the grounds for dismissal cited by the federal judge hinge on the same issue as the Sirius-XM merger: the relevant definition of the market where the deal is taking place.

While opponents of the satellite merger, like the National Association of Broadcasters, argue that it would create a monopoly in a discrete satellite radio market, Sirius CEO Mel Karmazin contends that the definition of the relevant market includes all terrestrial radio, as well as MP3 players and streaming radio on the Internet.

We've seen this before in technology, particularly in telecommunications, both at the FCC and within the halls of Congress. AT&T has largely reconstituted itself - it and Verizon are just about the last Baby Bells standing, AT&T being the much larger. (Recall the hilarious Stephen Collbert analysis, and note that Verizon could well be broken up, with much of it swallowed up by AT&T.)

One justification for this remonopolization of telephony is precisely the same as that of satellite radio - telephone companies compete in a larger space of telecommunications providers, including cable companies, Internet service providers, wireless data providers, and so on. So if the #1 and #3 companies merge, out of a total of four, as they did when SBC devoured BellSouth not long ago, forming what soon became the current AT&T, they were not the #1 and #3 telecommunications providers in a space with four players. The relevant space, as far as the FCC was concerned, included Comcast, Time Warner, Sprint, AOL, Google, and so on.

So too, when Whole Foods and Wild Oats merge, they are not the top two companies in their market, narrowly defined as health food stores, rather they're two relatively small players in the large world of supermarket chains. And Sirius and XM compete in a space that includes broadcast radio, Internet radio, the radio that comes from your cable provider, and maybe even the Musak in shopping mall.

To some extent, this seems disingenuous. If Starbucks and Dunkin Donuts merged, would we say that the result wasn't a monopolization of retail coffee, because, after all, McDonalds and Wal-Mart also sell coffee? Or because they're not the #1 and #2 companies in their market, rather they're two smaller players in the world of fast-food chains?

Still, there's no denying that consumers will find creative ways to get the goods and services they want. As the saying goes, the railroads should have thought of themselves in the transportation business. Whole Foods and Wild Oats ought to think of themselves as competing for supermarket dollars. And Sirius and XM ought to be thinking of themselves as in the delivery-of-digital-content-that-happens-to-mostly-be-audio-programs-right-now business.


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