WASHINGTON - The Justice Department on Monday approved Sirius Satellite Radio's proposed $5 billion buyout of rival XM Satellite Radio Holdings, saying the deal was unlikely to lessen competition or harm consumers.
The transaction was approved without conditions, despite opposition from consumer groups and an intense lobbying campaign by the land-based radio industry.
The combination still requires approval from the Federal Communications Commission, which prohibited a merger when it first granted satellite radio operating licenses in 1997.
The Justice Department, in a statement explaining its decision, said the combination of the companies won't hurt competition because the companies are not competing today.
Customers must buy equipment that is exclusive to either XM or Sirius, and subscribers rarely switch providers.
"People just don't do that," Thomas Barnett, assistant attorney general for the Antitrust Division, said in a conference call with reporters.
The government also appeared to endorse a central argument the companies used in pushing for their merger: that ample competition is provided by other forms of audio entertainment, including "high-definition" radio, Internet-based radio stations and even devices like Apple Inc.'s iPod.
"The likely evolution of technology in the future, including the expected introduction in the next several years of mobile broadband Internet devices, made it even more unlikely that the transaction would harm consumers in the longer term," the Justice Department said.
The buyout received shareholder approval in November.
The companies said the merger will save hundreds of millions of dollars in operating costs - savings that will ultimately benefit their customers. The Justice Department supported that argument in its statement.
Shares of both companies rose after the news.