Sirius XM Antitrust Lawsuit Approved for Class-Action Status

Sirius XM Radio Inc. (SIRI), the biggest U.S. satellite-radio broadcaster, must face class-action claims in a lawsuit alleging antitrust violations, a federal judge ruled.

U.S. District Judge Harold Baer in Manhattan allowed the antitrust claims to proceed while dismissing claims filed under 20 state consumer-protection laws. In a separate order yesterday, Baer said the case may go forward on behalf of a nationwide group of Sirius XM subscribers.

In a complaint filed in 2009, the subscribers claimed that New York-based Sirius XM, the product of a 2008 merger between Sirius Satellite Radio Inc. and XM Satellite Holdings Inc., abused its monopoly power by illegally raising prices by almost 30 percent. The suit targets so-called music royalty fees that Sirius charges in addition to subscription fees.

The class of subscribers may number about 20 million, according to James Sabella, a lawyer who represents them. They’re seeking about $1 billion and a court order preventing Sirius XM from violating antitrust laws, which may require a freeze on future rate increases or the breakup of the company, he said today. A trial is set for May 2.

In the ruling yesterday, Baer certified a class of Sirius XM customers who since July 29, 2008, paid the music royalty fee, an increased monthly charge to activate more than one radio, or an Internet access fee.

Sirius ‘Heartened’

Patrick Reilly, a Sirius XM spokesman, said yesterday in an e-mailed statement that the company was “heartened” by the portions of the ruling in its favor.

“The surviving claims in this suit -- that the Sirius-XM merger lessened competition or led to a monopoly -- are matters that have already been passed upon by the United States Department of Justice and the Federal Communications Commission,” Reilly said. “With new competitors emerging almost daily, we continue to believe these claims are without merit and intend to vigorously defend this matter.”

The subscribers claim Sirius XM violated promises made to U.S. regulators before the merger.

“The assurances that Sirius XM officials provided to regulators in order to get the deal done in 2008 could not have been more clear,” Paul F. Novak, another lawyer for the plaintiffs, said today. “They promised lower prices and more choice, and once the deal was done, they immediately implemented the opposite of what they had promised.”

The case is Blessing v. Sirius XM Radio Inc., 09-cv-10035, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Bob Van Voris in New York federal court at rvanvoris@bloomberg.net; David Glovin in New York federal court at glovin@bloomberg.net.

To contact the editor responsible for this story: David E. Rovella at drovella@bloomberg.net.

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