Old anti-trust case could thwart <BR>EchoStar's bid for DirecTV

LONDON - An old anti-trust lawsuit EchoStar filed against DirecTV, accusing it of abusing its dominant market position, could now come back to haunt EchoStar as it tries to persuade US regulators that it should be allowed to acquire its larger rival and become the dominant market player.

Last month, EchoStar won the battle for DirecTV after Rupert Murdoch's News Corporation walked away from negotiations with General Motors, which owns DirecTV parent Hughes.



However, the deal faces a lengthy competition inquiry as the merged company will dominate the satellite broadcasting business in the US. There are concerns that it will reduce competition and choice, particularly in rural areas not served by cable.



EchoStar looks set to face accusations of hypocrisy as it tries to back-track on an argument it presented in February last year, when it accused DirecTV of abusing its dominant position in the market.



EchoStar alleged that its rival was trying to coerce national retailers to keep EchoStar's products off shelves. Its lawyers then tried to add weight to the case by arguing that satellite direct-to-home broadcasting was a standalone market.



Part of EchoStar's defence in its anti-trust case, which it will put forward to the US Justice Department and the Federal Communications Commission, will be based on the grounds that satellite TV services compete with cable for market share.



It will then try to convince anti-trust regulators that, separately, the satellite TV companies could not compete with the cable companies.



This argument flies in the face of EchoStar's earlier argument that the satellite broadcasting sector was a standalone industry. This could weaken its argument, as many believe that a company loses credibility if it flips on a core issue.



If EchoStar fails to convince the regulators, it could once again leave the way open for Murdoch, who only lost his long-sought-after US satellite prize after 18 months of negotiations.



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