Monday, May 4, 2020 News

Cengage/McGraw-Hill Merger Called Off

Open Education

Textbook publishing giants Cengage and McGraw-Hill have called off their planned merger amid widespread opposition and antitrust concerns.

On May 4, 2020, textbook publishing giants Cengage and McGraw-Hill announced that they have called off their proposed merger, which would have created a $5 billion publishing giant and turned the college textbook market into an effective duopoly. Announced just over a year ago, the proposed merger has drawn widespread opposition from the higher education community— including students, consumer groups, libraries, universities, and bookstores—along with growing concern from House and Senate lawmakers and antitrust authorities.

“Defeating this merger is a win for students, faculty, and preserving competition in the textbook marketplace,” said Nicole Allen, Director of Open Education for SPARC. “In an industry already rife with anticompetitive practices, preventing this merger averts dire harms that could have caused textbook prices to rise, innovation to dwindle, and student data to be exploited.” 

The two companies attribute the merger’s fate to a failure to reach an agreement with antitrust enforcers on how to divest their overlapping business. McGraw-Hill states that “the required divestitures would have made the merger uneconomical” and Cengage references the “inability to agree to a divestitures package with the U.S. Department of Justice.” Another likely factor is the in-depth investigation launched by the U.K., which had extended the merger timeline until October 2020. 

Both companies had been operating as separate entities while the merger was under review, its termination effectively maintains the status quo. However, both companies had been counting on the merger to increase their profits, so there are likely to be financial implications for the companies ahead.

SPARC has been a leader in the opposition against the Cengage/McGraw-Hill merger. In August 2019, we filed a detailed 49-page antitrust analysis of the merger with the U.S. Department of Justice, which we also sent to three international jurisdictions and all fifty state attorneys general. We have worked to educate antitrust officials and U.S. lawmakers about the harms of the merger, along with broader threats concerning consolidation of student data. 

“While the immediate threat of the merger has been averted, higher education must be more alert than ever about the publishing industry’s growing control over data infrastructure. As publishers rebrand themselves as technology companies and double down on ‘inclusive access’ programs that force digital textbooks into student hands (and wallets), higher education must take steps to preserve competition and protect the principles of fairness and strong privacy protection,” said Allen. 

SPARC will continue our work to advocate for robust competition in academic publishing and community-owned infrastructure. Our Roadmap for Action outlines steps that institutions can take to keep their data and content infrastructure open for competition.

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