Commission Clearance For Cengage And McGraw-Hill To Merge NZ Publishing Arms

The Commerce Commission has granted clearance, insofar as it relates to New Zealand markets, for Cengage Learnings Holdings II, Inc. and McGraw-Hill Education, Inc. to merge their global publishing businesses.

In reaching its decision, the Commission considered the competitive impact of the proposed merger on the supply of textbooks to schools and higher education institutions in New Zealand. In particular, the Commission examined the competitive impact on seven higher education subject areas where the merging parties’ combined shares of supply were the most concentrated – management, marketing, finance, quantitative business, mathematics, physical education and foreign languages and literature.

The Commission’s focus was predominantly on considering the ability of the merged entity to reduce quality in the relevant subject areas in New Zealand, through potential reductions in the range and quality of the content of textbooks and in the supporting learning materials such as teaching resources and practice questions. Chair Anna Rawlings said the Commission is satisfied that the proposed merger is unlikely to substantially lessen competition in any New Zealand market.

“We consider that the presence of other major publishers in New Zealand, together with the presence of smaller suppliers in particular subject areas is likely to constrain the merged entity such that a substantial lessening of competition in those subject area markets in New Zealand is unlikely” Ms Rawlings said.

A public version of the written reasons will be available on the Commission’s case register in the near future.

Background
This decision relates to a clearance application from Cengage and McGraw-Hill that we registered on 29 October 2019.
Cengage and McGraw-Hill are both global publishers of educational products, such as textbooks and other supporting learning materials used in educational institutions.
In New Zealand, Cengage supplies textbooks and associated products to the primary, secondary and tertiary education sectors, while McGraw-Hill predominantly supplies these products to the tertiary sector with a small volume supplied to the primary school sector.
We will give clearance to a proposed merger if we are satisfied that the merger is unlikely to have the effect of substantially lessening competition in a market.
Further information explaining how the Commission assesses a merger application is available on our website.
 

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