WASHINGTON (Reuters) - The U.S. Justice Department said on Thursday it had filed a lawsuit aimed at stopping Quad/Graphics Inc from buying LSC Communications, two of the biggest companies which print books, magazines, and catalogs.

The Justice Department’s Antitrust Division said that the two companies were each other’s biggest rivals, citing internal documents that refer to a price war between them and a “two-horse race between LSC and Quad.”

The $1.4 billion deal was announced in October 2018.

“American publishers and retailers rely on Quad and LSC to print and distribute billions of magazines, catalogs, and books each year,” said Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division. “If this deal were allowed to proceed, Quad would dominate the markets for magazine, catalog, and book printing services and be able to raise prices.”

In its complaint, filed in federal court in Illinois, the Justice Department said that Quad and LSC were the only realistic option for many publishers because of their complex printing equipment. It cited at least one bidding war between the two that resulted in the offer of a $10 million signing bonus.

The complaint also noted that executives of the two companies had complained about the competition, with one lamenting that a publisher was “exploiting the fact that LSC [and] Quad[‘s] CEO’s want to beat each other into oblivion.”

A spokeswoman for Quad declined comment; no one from LSC was immediately available for comment. </s> WASHINGTON (Reuters) - The U.S. Justice Department said on Thursday it had filed a lawsuit aimed at stopping Quad/Graphics Inc from buying LSC Communications, two of the biggest companies that print books, magazines and catalogs.

The Justice Department’s Antitrust Division said the two companies were each other’s biggest rivals, citing internal documents that refer to a price war and a “two-horse race between LSC and Quad.”

The $1.4 billion deal was announced in October 2018.

“American publishers and retailers rely on Quad and LSC to print and distribute billions of magazines, catalogs and books each year,” said Makan Delrahim, an assistant attorney general in the Antitrust Division. “If this deal were allowed to proceed, Quad would dominate the markets for magazine, catalog and book printing services and be able to raise prices.”

LSC Communications said in a statement the Justice Department “has reached the wrong conclusion in its assessment of the transaction,” adding that it will join Quad “in vigorously defending the lawsuit in court.”

Quad’s chief executive, Joel Quadracci, said the company is “fully committed to defending the DOJ’s lawsuit in court.”

In its complaint, filed in federal court in Illinois, the Justice Department said Quad and LSC were the only realistic option for many publishers because of their complex printing equipment. It cited at least one bidding war between the two that resulted in the offer of a $10 million signing bonus.

The complaint also noted that executives of the two companies had complained about the competition, with one lamenting that a publisher was “exploiting the fact that LSC [and] Quad[‘s] CEO’s want to beat each other into oblivion.” </s> Law360 (June 20, 2019, 10:00 PM EDT) -- The U.S. Department of Justice on Thursday sued Quad/Graphics Inc. to halt the printing company’s planned $1.4 billion acquisition of a competitor, LSC Communications Inc., arguing the combined businesses would have too much market power. The two printing companies are each other’s “#1 competitor,” and a merger would leave customers seeking printing services with essentially only one option, prosecutors argued. “If this deal were allowed to proceed, Quad would dominate the markets for magazine, catalog, and book printing services and be able to raise prices and reduce quality at the expense of publishers, retailers, and, ultimately, American consumers,” Makan Delrahim of...

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TRY LAW360 FREE FOR SEVEN DAYS </s> A federal judge Monday blocked the proposed merger of health insurers Aetna Inc. and Humana Inc. on antitrust grounds, a potentially fatal legal blow to the $34 billion deal.

U.S. District Judge John D. Bates ruled the Justice Department had proven its case that the merger would unlawfully threaten competition.

The judge said the transaction could mean higher prices and reduced services for seniors who purchase the private Medicare plans known as Medicare Advantage. He also said the merger would harm competition on public insurance exchanges in parts of Florida.

Aetna and Humana didn't immediately respond to requests for comment. Shares of the companies fell 2.2% and 2.4%, respectively, in midday trading.

Aetna and Humana announced their planned merger in July 2015, saying the deal would allow them to offer more cost-effective products by combining their strengths and becoming more efficient. Justice Department antitrust enforcers filed a lawsuit challenging the transaction a year later. A trial took place last month.

The Aetna-Humana deal is one of two major health insurance mergers being challenged by the Justice Department. The department simultaneously sued to block the proposed combination of Anthem Inc. and Cigna Corp. A trial in that case took place in the same courthouse and a different judge, Amy Berman Jackson, is expected to rule soon.

The lawsuits were among the last major law enforcement actions taken by Obama administration antitrust officials. </s> WASHINGTON, June 20 (Reuters) - The Justice Department said on Thursday that it had filed a lawsuit aimed at stopping Quad/Graphics Inc from buying LSC Communications .

The $1.4 billion deal was announced in October 2018. Both companies print books, magazines, and catalogues. (Reporting by Diane Bartz Editing by Susan Thomas) </s> Law360 (August 14, 2019, 6:35 PM EDT) -- The Scholarly Publishing and Academic Resources Coalition became the latest group to urge the U.S. Department of Justice to block the proposed merger between college textbook publishing giants Cengage Learning and McGraw-Hill Education, saying Wednesday it would decrease competition and increase book prices for students. The proposed merger would violate the Clayton Act by creating a combined company that controls 45 percent of the textbook market, according to SPARC. Additionally, as more textbook data moves online, publishers have access to large amounts of students' data and this merger could result in a new platform monopoly in education, SPARC added. "The merger...

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TRY LAW360 FREE FOR SEVEN DAYS </s> WASHINGTON, Aug 14 (Reuters) - An education group seeking to increase access to college textbooks and research materials on Wednesday asked the U.S. government to block the proposed merger of textbook publishers McGraw-Hill Education Inc and Cengage Learning Holdings II Inc.

The proposed merger "will significantly decrease competition in a market already rife with anti-consumer behavior," the Scholarly Publishing and Academic Resources Coalition (SPARC) said in a filing with the Justice Department's Antitrust division.

SPARC advocates the open sharing of research and educational material. Its members include colleges and universities from around the United States, such as Harvard University, Iowa State University and the Massachusetts Institute of Technology, according to its website.

Student consumers would face "irreparable harm" if the merger moves forward and the "merger must be blocked in its entirety," SPARC said.

A representative for the two companies said Cengage and McGraw-Hill were working closely with the Justice Department and were "confident that the transaction will benefit our customers and create more affordable options for students."

The companies said they expect the deal to close early next year. </s> (Reuters) - A federal judge on Wednesday ruled against U.S. health insurer Anthem Inc’s (ANTM.N) proposed $54 billion merger with smaller rival Cigna Corp (CI.N), derailing an unprecedented effort to consolidate the country’s health insurance industry.

The U.S. Justice Department sued in July to stop Anthem’s purchase of Cigna, a deal that would have created the largest U.S. health insurer by membership, and Aetna Inc’s AET.N planned $33 billion acquisition of Humana (HUM.N).

The merger would have worsened an already highly concentrated market and is likely to raise prices, Judge Amy Berman Jackson of the U.S. District Court for the District of Columbia said while issuing the ruling against Anthem’s deal.

Last month, a different U.S. judge ruled against Aetna’s proposed deal for Humana.

Government antitrust officials argued that both deals would lead to less competition and higher prices for Americans. The acquisitions would have reduced the number of large national U.S. insurers from five to three.

Jackson had separated the Justice Department’s case into two trials. Her ruling focused only on the first one in which the Justice Department argued that the tie-up would hurt the ability of large national employers to get competitive rates for the health coverage they provide workers.

The second trial considered overlaps in the two insurers’ business selling health benefits to individuals, and administering Medicare Advantage coverage to the elderly.

Anthem argued that there was enough competition because large companies with more than 5,000 employees often used multiple smaller players in the national market, but the judge disagreed.

“Regional firms and new specialized ‘niche’ companies that lack a national network are not viable options for the vast majority of national accounts, and they will not ameliorate the anticompetitive effects of this merger,” Jackson wrote.

Cigna intends to carefully review the opinion and evaluate its options in accordance with the merger agreement, it said in a statement.

Anthem said on Thursday that it intends to promptly file a notice of appeal and request an expedited hearing of its appeal to reverse the court’s decision.

PROTECTING CONSUMERS

Acting Assistant Attorney General Brent Snyder of the Justice Department’s Antitrust Division said the ruling had prevented American consumers from facing higher health insurance premiums and less innovation.

Bill Baer, who was head of the Justice Department’s antitrust division when it decided to sue to block both the insurance deals but has since left the agency, also hailed the decision. “Together with the decision on Aetna and Humana, this preserves five large national providers of critically important health insurance products,” he said.

The fifth player, UnitedHealth Group Inc. (UNH.N) was not involved in the deals.

Some Wall Street analysts expect all four of the companies to now move on, although Aetna and Humana have not committed to doing so. Their deal expires Feb. 15.

“The likelihood of success in an appeal would be very low,” said Matthew L. Cantor, a partner in the law firm of Constantine Cannon in New York. He noted points in the judge’s order about the concentrated national market, the high barrier to entry for competitors, and the companies’ roles as direct competitors.

The deals were announced at a time when former President Barack Obama’s national healthcare reform law was fully in place and the four insurers were growing in the individual insurance market it established. The insurers said new costs, from higher taxes to investments in new Obamacare products, were driving their need for scale.

That landscape is less certain now. Aetna and Humana have cut back Obamacare enrollment for 2017 after losses, and President Donald Trump and fellow Republicans are weighing a “repeal and replace” path for Obamacare.

More deals may be in the offing, JPMorgan analyst Gary Taylor said in a research note. “Given Anthem and Cigna’s pursuit of Humana in 2015, we think new potential combinations could emerge.” He does not expect shares in either Anthem or Cigna to move given that investors had expected this ruling.

Cigna is entitled to receive from Anthem a $1.85 billion break-up fee if the deal fails to win regulatory approval, according to the merger agreement. The agreement also requires Cigna to have put forth its best effort on that front.

The office building of health insurer Anthem is seen in Los Angeles, California February 5, 2015. REUTERS/Gus Ruelas

But Anthem and Cigna disagreed about the deal in court, Jackson wrote in her order, with Cigna refusing to sign off on Anthem’s interpretation of how the companies could garner savings.

Anthem is the largest member of the Blue Cross Blue Shield Association and operates BCBS plans in 14 states. It and said it could apply its discounts to Cigna members while Cigna said its collaborations with doctors would save money.

Pre-merger integration was stalled and incomplete, the judge said. </s> Six months after the U.S. Department of Justice and attorneys general from eight states and the District of Columbia sued to stop the merger of insurance giants Aetna and Humana, the federal judge in the case has blocked the deal from moving forward.

The DOJ had argued that the combination of these two companies would “substantially” harm competition in the marketplace for both individual health insurance plans purchased through public exchanges, and for Medicare Advantage insurance plans.

The Medicare Advantage coverage posed the larger antitrust concern, as investigators for the government identified 364 counties in 21 states where they believe a combined Aetna/Humana would have market share levels for this insurance above what is generally considered to be unlawful.

The insurers countered that the DOJ was neglecting to account for traditional Medicare plans provided through state agencies. When combining Original Medicare and Medicare Advantage, argued the insurance companies, there are sufficient competition in the marketplace.

With regard to issues about the public exchanges, the DOJ concluded that, post-merger, Aetna and Humana would hold too much market share in 17 counties in three different states. The insurance companies claimed that is a non-problem, as Aetna is not offering plans in these exchanges for 2017.

In the end, D.C. District Court Judge John Bates sided with the DOJ and the states, concluding in his 158-page opinion [PDF] that the proposed merger is “likely to substantially lessen competition in Medicare Advantage in all 364 complaint counties,” and that the government was correct to not consider Original Medicare as a direct competitor to Advantage.

Health insurance exchanges in three Florida counties would also be adversely affected. The judge also notes that Aetna withdrew some selling insurance in the other counties mentioned in the DOJ complaint to “evade judicial scrutiny of the merger,” and was therefore not an indicator that the company wouldn’t simply re-enter those markets after the merger.

Aetna says it is weighing an appeal.

Today’s ruling was applauded by some consumer advocates, including our colleagues at Consumers Union, who had previously testified before the Senate Judiciary Committee and the California Department of Insurance about the potential negative impact of this merger.

“The Justice Department laid out strong proof at trial that the merger of these two health insurance giants would have seriously harmed consumers across the country, especially seniors using Medicare Advantage, leaving them with fewer choices, higher costs, and ultimately, with inferior coverage,” said George Slover, senior policy counsel at CU. “This problematic deal simply couldn’t be fixed, and we are pleased the court has agreed.”
The Antitrust Division of the U.S. Justice Department files a lawsuit against two large printing companies contemplating a merger. If the deal is allowed to proceed, the filings claim, the combined company would dominate the market for printing magazines, catalogs and books.