by Dennis “Cos” Costa
In an SEC Form 8-K filing with the Securities And Exchange Commission (SEC) on May 16th, 2011, Sirius XM Radio Inc. (NASDAQ: SIRI) outlined its agreement to settle the pending lawsuit entitled, Carl Blessing et al. v. Sirius XM Radio Inc.
The case involves a class action based on the Plaintiffs’ purchase of satellite digital audio radio services (SDARS), more commonly know as “satellite radio”, from the Defendant at various locations throughout the United States. The Plaintiffs proposed that the July 28th, 2008 merger of the only two satellite radio providers, Sirius Satellite Radio and XM Satellite Holdings, created a monopoly in the newly formed company, Sirius XM Radio Inc. As such, the Plaintiff claimed that the Defendants, Sirius XM Radio Inc. abused its monopoly power in violation of federal antitrust laws, and deceived its customers in violation of state consumer protection laws. The Defendants vigorously opposed the Plaintiffs’ claims.
The specifics involve the Defendant making upward adjustments to its pricing with respect to certain of its services and fees. The actions in question were; increasing the cost to multi-radio subscribers from $6.99 to $8.99, deleting their included streaming lower bandwidth internet service and initiating a $2.99 fee for their improved internet service. In addition, they began charging a “U.S. Music Royalty Fee” (MRF) of $1.98 for a primary subscription and $.97 for additional subscriptions. The Plaintiffs allege that these price increases were the result of the Defendant’s abuse of monopolistic power, with the Defendant claiming that the price increases simply reflect increases in the Defendant’s costs and the higher quality of internet service provided. Continue reading