April 27, 2020 / 9:37 PM / a month ago

Six senators urge Justice Department to take tough look at 'problematic' textbook merger

WASHINGTON (Reuters) - Six Democratic senators have urged the U.S. Justice Department to take a hard look at what they called a “problematic” merger of the No. 2 and No. 3 largest textbook companies, Cengage and McGraw-Hill.

“The combination of high concentration, a history of skyrocketing textbook prices that far outpace inflation, and a captive market makes this anticompetitive merger one that risks further aggravating the affordability of education,” Senator Richard Blumenthal and five colleagues said in a letter dated Friday.

The senators, who also include Cory Booker, Richard Durbin, Dianne Feinstein, Mazie Hirono and Tina Smith, noted that Pearson (PSON.L) and the two merging companies together have more than 80% of the market, that prices rose more than three times faster than inflation between 2002 and 2012 and that students cannot bargain-hunt but must buy the book ordered by their professors.

The deal, which would create a company worth about $5 billion, comes at a time when college textbook prices are stable or declining slightly after two decades of rising sharply, according to U.S. government data.

McGraw-Hill is owned by Apollo Global Management LLC (APO.N).

The lawmakers also warned that the companies’ use of student data has the potential to harm their privacy because the companies collect sensitive information like students’ education plans, assignments, reports from counselors and medical records.

“We urge the (Antitrust) Division to carefully review this problematic merger in light of these concerns,” they wrote.

A spokeswoman for both companies pointed to their merger website, which said: “Cengage and McGraw-Hill are joining to create a new global learning company to provide students with more affordable access to superior course materials and platforms. The new company will positively impact the lives of millions of students globally.”

The Justice Department did not immediately respond to a request for comment.

Reporting by Diane Bartz; Editing by Leslie Adler

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below