Friday, May 07, 2010

FTC Alleges Merger-to-Monopoly in Market for Education Marketing Information

This posting was written by Jeffrey May, Editor of CCH Trade Regulation Reporter.

Dun & Bradstreet Corporation’s 2009 acquisition of the assets of Quality Education Data (QED), a division of Scholastic, Inc., “is in practical effect a merger-to-monopoly” in the market for kindergarten through twelfth grade educational marketing data, the Federal Trade Commission alleged in an administrative complaint announced today. The agency is seeking divestitures of assets necessary to restore the competition that allegedly was lost as a result of the acquisition.

Prior to the transaction, Dun & Bradstreet's Market Data Retrieval and QED were the only two significant competitors in the K-12 data market, according to the agency. As a result of the acquisition, Market Data Retrieval, which describes itself as “the market’s first choice for marketing information and services for the K-12, higher education, library, early childhood, and related education markets,” allegedly holds over 90 percent of the K-12 data market.

Educational marketing data includes contact, demographic, and other information relating to teachers, administrators, schools, and individual school districts, that is sold or leased to customers, the FTC explained. The data sold by these companies is used to sell books, education materials, and other products to teachers and other educators nationwide.

Low-Dollar-Value Transaction

Dun & Bradstreet acquired the QED assets for approximately $29 million. Because the transaction fell below the threshold for premerger notification filings under the Hart-Scott-Rodino (H-S-R) Act, the federal antitrust agencies did not have had an opportunity to require the parties to wait to consummate the transaction while its potential competitive effects were considered pursuant to the H-S-R program. Nevertheless, the FTC ultimately discovered the transaction.

“Despite its relatively low dollar value, this transaction dramatically decreased competition in the marketplace,” said FTC Bureau of Competition Director Richard Feinstein. “When Dun & Bradstreet acquired QED, it bought its closest competitor and created a monopoly. That’s going to get the FTC’s attention every time.”

The Commission vote approving the administrative complaint was four-to-one, with Commissioner J. Thomas Rosch voting against. The complaint, In the Matter of The Dun & Bradstreet Corporation, FTC Docket No. 9342, will appear at CCH Trade Regulation Reporter ¶16,445.

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