The Department of Justice (DOJ) has announced a settlement with London-based publishing company Pearson Plc, which if approved will allow the company to proceed with its US$950 million acquisition of rival Harcourt Assessment. On January 24, 2008, the DOJ filed a civil antitrust action in the Federal District Court for the District of Columbia seeking to block the transaction. The DOJ alleged that the transaction, as planned, would harm competition in the markets for adaptive behavior, speech and language, and adult personality disorder clinical tests. Such tests are used by psychologists, speech pathologists and others to diagnose certain disorders and to identify individuals at risk of developing such disorders.
Pearson Education Inc., a wholly owned subsidiary of Pearson Plc, develops, markets and sells clinical tests throughout the United States. Harcourt Assessment, its largest rival, is owned jointly by UK-based Reed Elsevier PLC and Reed Elsevier, NV of the Netherlands. According to the DOJ’s complaint, Pearson and Harcourt are the two leading publishers of behavior and speech and language clinical tests in the United States. Reduced competition in the markets for these products, the DOJ alleged, would be likely to cause higher prices and reduce innovation. In addition, Pearson produces the leading US adult abnormal personality test. Harcourt has invested significant resources to develop a competing test and, according to the DOJ, would enter the market within the next year if it were not acquired by Pearson.
The settlement, which was filed along with the complaint, would remedy the anticompetitive effects of the deal by requiring certain key divestitures. Among them is the divestiture of Harcourt’s adaptive behavior clinical test, its adult abnormal personality clinical test, which is currently under development, and either Pearson’s or Harcourt’s speech and language clinical test. Under the terms of the proposed settlement, the DOJ must approve the buyer of each divested asset. The proposed settlement is subject to approval by the court, following a period of 60 days for public comment.