Sirius XM Radio face an antitrust class action claim that it runs a monopoly to the tune of $89 million a year through small increases in fees and services for its nationwide satellite radio service.
A federal judge in New York granted class-action status for a group of plaintiffs alleging anti-trust violations but denied certification for other groups charging breach of contract and violation of consumer protection laws. Judge Harold Baer Jr. also denied a motion for an injunction against the company.
The plaintiffs claim that since the July 2008 merger of Sirius and XM, which eliminated significant competition in the satellite radio market, Sirius XM has made multiple increases in the charges it levies on consumers, including:
increase in the monthly charge per additional radio for multi-radio subscribers from $6.99 per month to $8.99;
initiating a $2.99 monthly fee for internet streaming;
charging a “U.S. Music Royalty Fee” between 10% and 28%; and
increases in various administrative fees.
The plaintiffs allege that these price increases are the result of Sirius XM's abuse of monopoly power, while the company claims that the price increases simply reflect increases in its costs and the higher quality of service provided.
Contradicts a promise
If true, the allegations would contradict pre-merger promises made by Mel Karmazin, who was CEO of Sirius and later became CEO of the combined company.
"No consumer will pay more than what they pay now," Karmazin said at a National Press Club appearance in July 2007. Then-XM Chairman Gary Parsons agreed, saying in a press statement that "the merger would enable us to deliver more choices and lower prices for consumers."
Rate increases are not the only source of complaints about Sirius XM. One of the more perplexing comes from Joseph of N. Massapequa, NY, who told ConsumerAffairs.com he bought a "lifetime" subscription to Sirius in March 2009 and was told that he would be able to transfer the membership when he bought a new vehicle.
So when Joseph bought a new 2011 Hyundai Sonata that came equipped with XM Radio, he assumed he would be able to use his "lifetime" subscription to Sirius, since the two companies had merged.
"Boy, was I wrong!" Joseph said. "The customer service woman assisting me was lovely. But did explain to me that Sirius lifetime subscriptions ($400.00) could not be transferred to a XM Radio vehicle. …I escalated this to a manager and they also would not budge."
Most other consumer beefs about Sirius XM revolve around unexpected renewals.
"Itried to cancel my service, with no luck. My credit card information was out of date and should not have been put through. Sirius changed the good through date to 2011 ( which is not the correct year) and put the charge through anyway," said Mark of Lawrenceville, GA.