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Concern over XM/Sirius merger review

WASHINGTON (Reuters) - Lawmakers on the U.S. House of Representatives antitrust task force have expressed concern about the Justice Department review of Sirius Satellite Radio's SIRI.O proposed purchase of rival XM Satellite Radio XMSR.O.

Shares of the two companies fell sharply in the final hour of regular trading on Wednesday, as some investors feared antitrust enforcers might reject the combination.

XM shares closed down nearly 10 percent to $13.21 and Sirius closed 6 percent lower at $3.29, both on Nasdaq.

In a letter to Attorney General Michael Mukasey dated December 11, Reps. John Conyers and Steve Chabot wrote:

“We were dismayed to learn of recent press reports suggesting that Justice Department staff may be trying to rush through the merger before you have an opportunity to fully participate, and that Assistant Attorney General for Antitrust Thomas O. Barnett may intend to grant the merger over the objections of department staff.”

A copy of the letter was obtained by Reuters on Wednesday. Conyers, who chairs the task force, is a Michigan Democrat, while Chabot is a Republican from Ohio.

Although U.S. lawmakers sometimes hold hearings to air concerns about large mergers, they have no direct say in whether the transactions are approved.

Analysts said the ultimate decision rested with senior Justice Department officials.

“We do believe there is a chance that the staff may recommend rejecting the merger of Sirius and XM, but even if they do, it remains up to the senior lawyers at the Department of Justice to decide whether or not to approve the merger,” said Frederick Moran, an analyst at Stanford Group.

XM had no comment on the share movement. A Sirius spokesman was not immediately available.

“There are only two possibilities here: something has leaked from Justice Department and their review on the proposed merger or some very smart, fast money is really wrong,” said Jon Najarian, co-founder of Web information site Optionmonster.com.

Barnett last year decided to approve appliance maker Whirlpool Corp's WHR.N purchase of Maytag Corp, despite the objections of staff lawyers at the antitrust division.

By some estimates, Whirlpool and Maytag made about 70 percent of the washing machines and dryers sold in the United States. But Barnett concluded concerns about market share had been offset by the prospect of expanded competition from other manufacturers and efficiencies gained by combining the two companies.

Reporting by Diane Bartz and Peter Kaplan in Washington, Franklin Paul and Michele Gershberg in New York, Doris Frankel in Chicago; Editing by Tim Dobbyn

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