FTC Requires Dun & Bradstreet to Divest Previously Acquired Marketing Data Firm

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

To settle an FTC challenge to a 2009 acquisition, the Dun & Bradstreet Corporation has agreed to divestitures aimed at addressing the potential competitive harm caused by the transaction.

An FTC consent order resolves a May 2010 FTC complaint against Dun & Bradstreet, over its $29 million acquisition of Quality Educational Data (QED), a division of Scholastic, Inc.

The agency alleged that the transaction combined Dun & Bradstreet’s Market Data Retrieval and QED—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.

The $29 million acquisition was below the threshold that would have triggered pre-merger filing requirements, and therefore the companies were not required to notify the FTC and Department of Justice.

Divestiture, Customer Option

The FTC consent order requires Dun & Bradstreet to divest to MCH Inc.—an institutional and educational data company active in the K-12 data market—an updated K-12 database, the QED name, and certain associated intellectual property.

Dun & Bradstreet has also agreed to offer its customers the option to terminate their contracts with the firm without penalty so that they can consider doing business with MCH and to release certain Dun & Bradstreet employees from restrictions on their ability to work for MCH. In addition, Dun & Bradstreet is required to provide MCH with technical assistance for up to one year. Finally, the order calls for the appointment of a Commission-designated monitor to ensure compliance with its terms.

Expedited Order

To “enable MCH expeditiously to acquire the divested assets and begin to compete during the upcoming back-to-school selling season," the Commission took the unusual step of issuing its final order in advance of the comment period. Dun & Bradstreet was required to complete the divestiture of the QED K-12 data business assets not later than five days after the order became final.

Normally, the agency does not issue a final order until it considers all comments received during the comment period. The agency explained, however, that the settlement remained subject to public comment. The Commission could reopen and modify its Decision and Order or commence a new administrative proceeding if necessary in light of the public comments.

Dun & Bradstreet Response

Dun & Bradstreet said in a September 10 statement that although it did not believe that the acquisition violated the federal antitrust laws, “our agreement to sell a package of assets acquired in the 2009 acquisition of QED preserves important enhancements to MDR’s offerings, while addressing the concerns raised by the FTC.”

The administrative action is In the Matter of the Dun & Bradstreet Corporation, FTC Docket No. 9342. Further details will appear at CCH Trade Regulation Reporter ¶16,497.

Text of the agreement containing the consent order, the decision and order, and a news release appear here on the FTC website.

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.