In January 2007, XM enjoyed about 58 percent of satellite radio subscribers, and

Question

In January 2007, XM enjoyed about 58 percent of satellite radio subscribers, and Sirius had the remaining 42 percent. Both firms were suffering losses, despite their dominance in the satellite radio market. In 2008, the DOJ decided not to challenge a merger, and these two firms united to become Sirius XM. If you were an economic consultant for Sirius, which of the following would NOT be a viable economic arguments designed to persuade the DOJ not to challenge the merger?

1. Rapidly changing technology in the portable music industry would prevent anticompetitive behavior. 2. There would be significant cost savings if the merger took place. 3. At least one of these firms is financially unstable. 4. The merger will help to increase the companies' market power. 5. Sirius and XM compete against other products such as broadcast radio and MP3s.

Explanation / Answer

the mergerwill help to increase the companies market power.

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