WASHINGTON (AFP) - The US Justice Department gave approval to a planned merger of US satellite radio groups Sirius and XM, saying the tie-up is unlikely to harm consumers or lessen competition.

The deal still needs approval from the Federal Communications Commission, which manages broadcast licenses.

Although the two companies operate the only satellite radio firms in the US market, the Justice Department said there is "a lack of competition between the parties in important segments even without the merger" and that consumers may still choose "alternative services."

Additionally, the agency cited:" technological change that is expected to make those alternatives increasingly attractive over time; and efficiencies likely to flow from the transaction that could benefit consumers."

The Justice Department added: "Although the firms in the past competed to attract new subscribers, there has never been significant competition between them for customers who have already subscribed to one or the other service and purchased the requisite equipment.

"Also, competition for new subscribers is likely to be substantially more limited in the future than it was in the past."

Sirius had more than 8.3 million subscribers at the end of 2007 compared with nine million for XM.

Some critics of the deal argued that a combined satellite group would benefit from sharing the same broadcast stars and could bring an end to rival bidding wars for top talent.

New York-headquartered Sirius broadcasts over 125 digital-quality channels, including 69 channels of commercial-free music and counts the controversial star Howard Stern among its broadcasters, as well as home lifestyle guru Martha Stewart.

XM boasts over 170 digital channels and offers a range of sports, music, news and talk radio, as well a device that allows subscribers to listen to its programs in their cars.

Since 2001, satellite radio has grown from a niche medium into a larger phenomenon across the United States.

Its total audience reach is around 10 percent of all Americans and some seven percent of car-drivers, according to Sirius and XM.

The subscription fees starting at about 12 dollars per month allow consumers to get high-quality broadcasts of specific themed programs, ranging from country music to hard rock to talk radio.

Reacting to the announcement, the two companies said in a joint statement they were "working with the FCC to secure final regulatory approval."

The Consumer Electronics Association meanwhile hailed the announcement.

"We applaud the Department of Justice for acting in the public interest to provide clarity in the marketplace and confidence to consumers," the group said.

"To the extent consumers have been awaiting a decision on this merger to purchase satellite radio systems, they can now move forward with confidence. Now that the DOJ has approved this merger without conditions, we urge the FCC to move quickly to a decision."

XM shares rose 15 percent on the news to 13.79 and Sirius climbed 8.6 percent to 3.15. The two firms each have a market value above four billion dollars.

At the time the deal was announced, the firms said it would create a company with a value of 13 billion dollars.

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