FTC Says Even Small Merger To Monopoly Is Big Deal

The FTC is suing Dun & Bradstreet to challenge its February 2009 acquisition of QED, a division of Scholastic that provides kindergarten through twelfth-grade educational marketing databases.

The combination of MDR, Dun & Bradstreet’s subsidiary, and QED was a merger-to-monopoly, giving the combined entity more than 90 percent of the market for K-12 educational marketing data.  The deal glided under the radar given it’s valuation of $29 million which falls below the HSR reporting thresholds.  But the FTC is now seeking to unravel the merger given its apparent anticompetitive effects. 

Despite its relatively low dollar value, this transaction dramatically decreased competition in the marketplace,” according to Richard Feinstein, Director of the FTC’s Bureau of Competition.  “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.”

So buyer beware.  Just because a transaction doesn’t trigger an HSR filing doesn’t mean the parties can go on their merry way.  A merger analysis should be performed even for smaller, non-reportable transactions to assess whether the post-transaction market share, barriers to entry and other indicators will set off alarm bells for regulators.