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In the light of the proposed merger between Sirius Satellite Radio Inc. and XM Satellite Radio Holdings Inc., questions have arisen about whether government officials should grant extra antitrust latitude to new and expensive digital technology until it becomes popular with consumers. The two satellite radio firms announced that they will end their rivalry and unite as a single entity in order to promote an expansion of the audience for satellite radio. According to Mel Karmazin, chief executive of Sirius, the combination of the firms represents a logical step in the evolution of audio entertainment. Experts believe that the companies will have to emphasize terms like 'audio entertainment' and 'unprecedented choice' to obtain approval from the United States Department of Justice and the Federal Communication Commission (FCC). Tyler Baker, head of the antitrust litigation group at Fenwick & West, says that if the market is defined as only satellite radio, the merger would mean a monopoly, which is bad in terms of competition. If the marketplace definition is broader, however, the companies will not necessarily face this difficult. According to Donald Falk, partner at Mayer, Brown, Rowe & Maw and a specialist in antitrust cases, satellite radio may be viewed as just another choice in a diverse audio market, competing with all types of audio content available on many devices. The argument that the market involves more than satellite radio is appealing, says Falk.
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