A “Highly Unusual” Situation

Amidst all the news surround the Sirius-XM merger here in the US, we seem to have forgotten about their Canadian counterparts. Sirius XM Inc., the recently-adopted name for the combined company, holds a 23.3% ownership interest in XM Canada and a 20% interest in Sirius Canada. The former is a publicly traded company run by Canadian Satellite Radio Holdings, while the latter is a private partnership between Standard Radio and the Canadian Broadcast Corporation. While the two companies no longer compete in the US, they continue to do so in Canada. This presents Canadian competition officials with a very bizarre situation. They are asked to regulate two separate companies over whom one entity has significant control.1 A Canadian merger would likely face scrutiny similar to that which the US merger encountered, and neither company has indicated a strong desire to merge. Ultimately though, the decision to merge likely lies with Sirius XM Inc., not its Canadian partners.

Source:XM, Sirius merger in U.S. raises competition concerns in Canada,” CBC News, July 30, 2008.

1. Accounting standards generally consider 20% or greater ownership significant enough to allow the holder to control the entity