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Industry

U.S Justice Department to block print merger

The Department of Justice (DOJ) has filed a civil antitrust lawsuit to block the merger between two of the United States’ major magazine, catalogue and book printing companies.

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The DOJ says the merger will allow Quad to dominate the book printing industry

Quad/Graphics announced in October 2018 its intentions to purchase LSC Communications, another magazine and book printing company, in a transaction that was valued at $1.4bn (£1.1bn).

The Antitrust Division’s lawsuit alleges that the merger would combine the only two significant providers of magazine, catalogue and book printing in the U.S, denying publishers and retailers the benefits of competition within the industry.

Assistant attorney general Makan Delrahim of the Justice Department’s Antitrust Division comments: “American publishers and retailers rely on Quad and LSC to print and distribute billions of magazines, catalogues, and books each year.”

“LSC is Quad’s primary competitor. If this deal were allowed to proceed, Quad would dominate the markets for magazine, catalogue, and book printing services and be able to raise prices and reduce quality at the expense of publishers, retailers, and, ultimately, American consumers.”

Joel Quadracci, Quad chairman, president and chief executive officer comments: “The DOJ’s position ignores the dynamic conditions in the U.S. commercial printing industry, which consists of nearly 50,000 companies, generates an estimated $76bn [approx. £59.6bn] in aggregate annual revenues and provides ample competition for the supply of printed products, especially in the face of decreasing demand.”

If this deal were allowed to proceed, Quad would dominate the markets for magazine, catalogue, and book printing services

Quaddraci continues: “Our goal is to make print a more effective and affordable media option to that of digital giants such as Google and Facebook. The DOJ does not appear to recognise the competitive effect of digital media on the print industry.”

In a statement, LSC Communications says it believes the DOJ has reached the wrong conclusion and will join Quad in defending the lawsuit in court.

Thomas J. Quinlan III, LSC Communications chairman, chief executive officer and president, adds: “We believe that the DOJ is wrong in its assessment of our transaction and that its action is counterproductive, especially in the context of the industry trends and continued consolidation.

"We continue to believe that our proposed combination will provide an overall more efficient experience for our clients.”

Earlier in March, the Open Markets Institute penned a letter to the DOJ protesting the merger, saying it would monopolise book printing to give American publishers only one option.

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