Legal Issues

Sherman Anti-Trust Act and public policy was enacted to prevent companies from forming cartels which will reduce competition in the market. The laws are enforced by Federal Trade Commission (FTC). In addition, the Antitrust Division of the U.S. Department of Justice also enforces the laws. The Act was introduced to allow a competitive environment in the business market and to prevent price controls by cartels. Lack of competition stagnate economic growth and allows a few firms to control the prices in the industry. Trusts are established to control the prices of an industry and to drive away some competitors from the industry. The law was established in 1890 to prevent monopolies and cartels from dominating the market. The law has been amended severally to accommodate the changing business world (Slesinger  Isaacs, 2004).

The operation of a business at a small scale may be expensive. Mergers are created to increase capital base so as to operate at a large scale. Large scale operations are less expensive due to economies of scale and other related benefits. The resources of one company may not be adequate enough to run big operations within the industry. The businesses must comply with the legal stipulations that the government has established (Slesinger  Isaacs, 2004).

Since incorporation, XM and Sirius companies have operated as separate entities in the industry of satellite radio providers. By the year 2008, the industry had only the two companies in existence and none other competed in the service provision. The proposition of the two companies to merge is valid due to the experiences the companies are facing (Smith  Beard, 1996).

The financial depression experienced by the world economies in the recent past left the two companies in a very bad financial position. To reinforce their financial strength, the two companies have decided to form a partnership and operate as one company. The new company, XM Sirius, will not operate like a cartel to regulate prices in the market. Customers will continue to pay the same price as before. The intention of the company is not to monopolize the industry but to strengthen the financial foundation of the business. This strategy has the objective of improving service delivery to its esteemed customers. The customer is the main target of the business. Satisfying the customers is very important since the existence of any business lies on the strength of its customer foundation. The main aim of the merger is to improve on the products of the company, hence increase customer satisfaction (Smith  Beard, 1996).

During the formation of XM and Sirius, the laws did not allow the operation of a merger in the industry. This was in the year 1997. Since the laws have changed, the two companies can merge to operate as one company. The new Act has created a way for the companies to merge and they cannot be stopped from doing so. The idea to merge the two companies is legal since all the statutes have allowed such an activity (Heggestad, 2008).

Conclusion
Businesses must comply with all legal stipulations of the country they are operating in. Sherman Anti-Trust Act and public policy was established to protect the customers from exploitation by cartels. The establishment of XM Sirius has been legalized and no restrictions have been placed on this merger. The company should operate normally since all legal requirements have been fulfilled.