(CN) - Sirius XM Radio, the nation's only satellite radio provider, is abusing its monopoly to the tune of $89 million a year through small increases in fees and services, a class action claims in Manhattan Federal Court. And it did this despite promising the FCC before it merged with its only competitor that "no satellite radio subscriber will have to pay more as a result of the merger," the class claims, citing a 2007 FCC memorandum.
Named plaintiff Carl Blessing claims that within 6 months of the 2008 merger between Sirius and XM, the new company increased its multi-radio subscription price by 30 percent and started charging subscribers for Internet access.
"In spite of the FCC's attempts to forestall the inevitable impact of combining the only two companies in the market, the merged entity has already exhibited anti-competitive behavior that has harmed consumers,' Blessing says.
He says that just 6 months after the merger, the company increased its monthly charge for multi-radio subscribers from $6.99 to $8.99 per radio.
About 4 million of the company's 18 million customers are multi-radio subscribers, Blessing says, which comes out to an additional $7.4 million per month, or nearly $89 million a year in increased revenue.
Also shortly after the merger, the company began charging $2.99 for subscribers to listen to radio programming via the Internet, while before the merger this was free, Blessing says.
"Since gaining monopoly power, Sirius XM has profitably sustained multiple price increases to satellite radio consumers, and the supposed efficiencies of the mergers have not been passed on to the consumers in the form of lower prices," Blessing says.
A spokesman for Sirius XM said the class action is baseless.
"The allegations contained in the complaint are completely without merit," said senior vice president Patrick Reilly. "We plan to vigorously defend this suit."
The class accuses Sirius XM of unlawful acquisition of monopoly power, breach of contract, bad faith, and for violating state consumer laws. It seeks restitution and treble damages. It is represented by James Eisenhofer with Grant & Eisenhofer.
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