The Department of Justice announced today that it will require Cengage Learning Inc. (Cengage) to divest assets related to textbooks and educational materials used in 14 college level courses in order to proceed with Cengage's proposed $750 million acquisition of Houghton Mifflin Harcourt Publishing Company's College Division (HM College). The divestiture assets include all tangible and non-tangible assets related to the textbooks and materials including, among other things, finished textbooks, publishing and licensing rights, author contracts and original artwork. The Department said that the transaction, as originally proposed, would have eliminated competition between Cengage and HM College and would have likely resulted in lower quality of textbooks and related educational materials or higher textbook prices.
The Department's Antitrust Division filed a civil lawsuit today in U.S. District Court in Washington, D.C., to block the proposed transaction. At the same time, the Department filed a proposed settlement that, if approved by the court, would resolve the lawsuit and the Department's competitive concerns.
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The divestitures of textbooks and related materials used to teach 14 college level courses are required to assure continued competition in markets where the transaction would otherwise result in a significant loss of competition. According to the complaint, Cengage and HM College compete head-to-head in the development and sale of textbooks and related print and electronic, including Internet-based, educational materials in these courses. The 14 courses are in the fields of business, foreign languages, history and interdisciplinary studies. Under the terms of the proposed settlement, the textbooks must be divested to publishers approved by the Department's Antitrust Division.
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