California filed a federal antitrust complaint over the $4 billion merger of textbook publishers Houghton Mifflin and Harcourt Education Group, claiming "The merged entity now commands over 50 percent of aggregate primary and middle school textbook sales in the U.S." Combined with its competitors Pearson and McGraw, the three giants now "account for roughly 87 percent of the aggregate commerce in U.S. primary and middle school textbooks." California claims that December 2007 merger will reduce competition, raise prices and "the value of the materials and services likely will decline."Not the news that HHM would be in the mood for. (Post: Credit Rating)
Update: In the complaint (and there is a link to it on the Courthouse web page at the bottom) on page 9 the complaint is dated May 15, 2009. This is being contested under the Clayton Act which is more stringent that the Sherman Act. (And I know that sounds like I know what it means but I really don't). Here is more on the Clayton Act. Look for references to section 7.
3 comments:
It's weird that the article is written in the future tense ("will reduce competition"), is that the way antitrust lawsuits are worded or is this an old article?
It is strangely written. My first thought was this was an old item but it is on the sources home page as well as in their email alert dated today.
From section 7 of Clayton Act, on which this complaint is based (emphasis mine):
"No person engaged in commerce or in any activity affecting commerce shall acquire, directly or indirectly, the whole or any part of the stock or other share capital and no person subject to the jurisdiction of the Federal Trade Commission shall acquire the whole or any part of the assets of another person engaged also in commerce or in any activity affecting commerce, where in any line of commerce or in any activity affecting commerce in any section of the country, the effect of such acquisition may be substantially to lessen competition, or to tend to create a monopoly."
Basically it sounds like they just have to prove it COULD be really bad for competition, not that it is currently.
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