[Federal Register Volume 73, Number 119 (Thursday, June 19, 2008)]
[Notices]
[Pages 34948-34961]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E8-13029]


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DEPARTMENT OF JUSTICE

Antitrust Division


United States v. Cengage Learning Holdings I, L.P., Cengage 
Learning Holdings II L.P., Cengage Learning, Inc., Apax/Tl Holdings, 
LLC, Education Media and Publishing Group Limited, and Houghton Mifflin 
Harcourt Publishing Company; Proposed Final Judgment and Competitive 
Impact Statement

    Notice is hereby given pursuant to the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16(b)-(h), that a proposed Final Judgment, 
Asset Preservation Stipulation and Order, and Competitive Impact 
Statement have been filed with the United States District Court for the 
District of Columbia in United States v. Cengage Learning Holdings I, 
L.P., Civil Action No. 1:08-cv-00899. On May 28, 2008, the United 
States filed a Complaint alleging that the proposed acquisition by 
Cengage Learning of the assets of Houghton Mifflin College Division 
would violate section 7 of the Clayton Act, 15 U.S.C. 18. The proposed 
Final Judgment, filed at the same time as the Complaint, requires 
Cengage Learning to divest assets related to textbooks and educational 
materials used in 14 college-level courses.
    Copies of the Complaint, proposed Final Judgment, and Competitive 
Impact Statement are available for inspection at the Department of 
Justice, Antitrust Division, Antitrust Documents Group, 450 Fifth 
Street, NW., Suite 1010, Washington, DC 20530 (telephone: 202-514-
2481), on the Department of Justice's Web site at http://www.usdoj.gov/atr, and at the Office of the Clerk of the United States District Court 
for the District of Columbia. Copies of these materials may be obtained 
from the Antitrust Division upon request and payment of the copying fee 
set by Department of Justice regulations.
    Public comment is invited within 60 days of the date of this 
notice. Such comments, and responses thereto, will be published in the 
Federal Register and filed with the Court. Comments should be directed 
to James J. Tierney, Chief, Networks & Technology Enforcement Section, 
Antitrust Division, Department of Justice, 600 E Street, NW., Suite 
9500, Washington, DC 20530 (telephone: 202-307-6200).

Patricia A. Brink,
Deputy Director of Operations, Antitrust Division.

The United States District Court for the District of Columbia

United States of America, United States Department of Justice, 
Antitrust Division, 600 E Street, NW., Suite 9500, Washington, DC 
20530, Plaintiff, v. Cengage Learning Holdings I, L.P., Cengage 
Learning Holdings II L.P., Cengage Learning, Inc., Apax/Tl Holdings, 
LLC, Education Media and Publishing Group Limiited, and Houghton 
Mifflin Harcourt Publishing Company, Defendants

Case No.:
Judge:
Case: 1:08-cv-00899, Assigned To: Bates, John D., Assign. Date: 5/28/
2008, Description: Antitrust.

Complaint

    The United States of America, acting under the direction of the 
Attorney General of the United States, brings this civil antitrust 
action to enjoin the proposed acquisition by Cengage Learning, Inc. and 
related entities (collectively ``Cengage''), of the assets of the 
Houghton Mifflin College Division (``HM College'') from Houghton 
Mifflin Harcourt Publishing Company and a related entity (collectively 
``Houghton Mifflin''), and to obtain equitable and other relief. The 
United States complains and alleges as follows:

I. Nature of the Action

    1. On or about November 30, 2007, Cengage and Houghton Mifflin 
entered into an agreement for Cengage to acquire the assets of HM 
College for approximately $750 million.
    2. Cengage and HM College publish textbooks and other educational 
materials and are direct competitors in the development, publication, 
and sale of textbooks and ancillary print and electronic (including 
Internet-based) educational materials (collectively ``textbooks and 
ancillary materials'') used in numerous courses taught at higher 
education institutions throughout the United States.
    For the courses listed in Appendix A of this Complaint (hereinafter 
``the Overlap Courses''), Cengage and HM College publish textbooks and 
ancillary materials that compete head-to-head with each other and are 
close substitutes.
    3. The markets for textbooks and ancillary materials used in the 
Overlap Courses are highly concentrated and have high barriers to 
entry. Cengage's proposed acquisition of the assets of HM College would 
eliminate competition between Cengage and HM College in these markets.
    4. The United States brings this action to prevent Cengage's 
proposed acquisition of the assets of HM College because it is likely 
to substantially lessen competition in the development, publication, 
and sale of textbooks and ancillary materials used in the Overlap 
Courses in violation of Section 7 of the Clayton Act, 15 U.S.C. Sec.  
18.

II. Parties to the Proposed Acquisition

    5. Cengage Learning, Inc. is a Delaware corporation with its 
headquarters in Stamford, Connecticut. Cengage Learning Holdings I, 
L.P., a limited partnership with its headquarters in Stamford, 
Connecticut, is the ultimate parent entity of Cengage Learning, Inc. 
Cengage Learning Holdings II L.P., a limited partnership with its 
headquarters in Stamford Connecticut, is an intermediate entity between 
Cengage Learning Holdings I, L.P. and Cengage Learning, Inc. Apax/TL 
Holdings, LLC, a Delaware limited liability company, is the general 
partner in Cengage Learning Holdings I, L.P. The above entities 
(collectively ``Cengage'') develop, publish, and sell textbooks and 
ancillary materials for use

[[Page 34949]]

in the United States and elsewhere. Cengage is the second largest 
publisher of textbooks and ancillary materials used in courses taught 
at higher education institutions in the United States and ranks among 
the top three sellers of such textbooks and materials for each of the 
Overlap Courses. Cengage had total revenues of about $1.7 billion in 
the twelve-month period ending September 30, 2007, including about $1 
billion in revenues from the sale of higher education textbooks and 
ancillary materials.
    6. Houghton Mifflin Harcourt Publishing Company (formerly Houghton 
Mifflin Company) is a Massachusetts corporation with its headquarters 
in Boston, Massachusetts. Education Media and Publishing Group Limited, 
a Cayman Islands corporation with its headquarters in Dublin, Ireland, 
is the ultimate parent entity of Houghton Mifflin Harcourt Publishing 
Company. The above entities (collectively ``Houghton Mifflin'') 
develop, publish, and sell textbooks and ancillary materials for use in 
the United States and elsewhere. Houghton Mifflin's HM College Division 
is the fifth largest publisher of textbooks and ancillary materials 
used in courses taught at higher education institutions in the United 
States and ranks among the top three sellers of such textbooks and 
materials for each of the Overlap Courses. Houghton Mifflin has total 
annual revenues of about $2.5 billion, and estimated 2007 revenues of 
about $230 million from the sale of textbooks and ancillary materials 
by HM College.

III. Jurisdiction and Venue

    7. The United States brings this action under Section 15 of the 
Clayton Act, as amended, 15 U.S.C. 25, to prevent and restrain the 
Defendants from violating section 7 of the Clayton Act, 15 U.S.C. 18.
    8. Defendants' activities in developing, publishing, and selling 
textbooks and ancillary materials for use in the Overlap Courses are in 
the flow of and substantially affect interstate trade and commerce. 
This Court has subject matter jurisdiction over this action pursuant to 
section 12 of the Clayton Act, 15 U.S.C. 22, and 28 U.S.C. 1331, 
1337(a), and 1345.
    9. Defendants sell higher education textbooks and ancillary 
materials in, and have consented to venue and personal jurisdiction in, 
this judicial district. Venue is proper under 15 U.S.C. 22 and 28 
U.S.C. 1391(d).

IV. Trade and Commerce

A. Relevant Product Markets for Textbooks and Ancillary Materials

    10. Publishers market and sell textbooks and ancillary materials 
for use in courses taught at higher education institutions. In most 
cases, instructors select the textbooks and ancillary materials that 
will be used for their courses, and students buy the selected textbooks 
and ancillary materials.
    11. Textbooks are often supplemented with ancillary educational 
materials, such as teacher's editions, audio-visual teaching tools, 
Internet content, CD-ROMs, workbooks, and study guides. These materials 
are often offered by publishers for free or as part of a discounted 
package to induce instructors to select a particular textbook and to 
induce students to purchase the publisher's textbooks and ancillary 
materials.
    12. Textbooks and ancillary materials are used as the primary 
teaching materials in each of the Overlap Courses. Textbooks provide 
the core written material for the Overlap Courses and serve as the 
foundation for instructors' overall lesson plans. While instructors 
could use alternative teaching materials (such as copies of lecture 
notes and articles), they generally select textbooks to serve as the 
primary teaching materials for their courses because accessing and 
creating alternative teaching materials is often a more time-consuming, 
costly, and inefficient method of delivering high quality content to 
their students. Instructors using textbooks and ancillary materials 
would not turn to any alternative teaching materials in sufficient 
numbers to defeat a small but significant increase in the price of any 
textbooks and ancillary materials for the Overlap Courses, or a small 
but significant decrease in the quality of such textbooks and other 
materials.
    13. Students taking the Overlap Courses are unlikely to have any 
significant alternatives to purchasing new textbooks for these courses. 
Although used textbooks, if available, can sometimes serve as 
alternatives for new textbooks, used textbooks are not uniformly 
available in large numbers. Moreover, instructors often require 
students to use the newest textbook editions. Publishers generally 
revise textbooks every three to four years and revised textbooks often 
differ substantially from their prior edition, limiting the extent to 
which used textbooks may be substituted for new editions of the same 
textbooks. Students would not turn to purchasing used textbooks in 
sufficient numbers to defeat a small but significant increase in the 
price of a new edition of the textbooks.
    14. Each Overlap Course is a separate course focused on a different 
subject and therefore requires instructors and students in the course 
to use the textbooks and ancillary materials that have been developed 
for that course. For each Overlap Course, the textbooks and ancillary 
materials for that course constitute a separate relevant product market 
and a line of commerce pursuant to Section 7 of the Clayton Act.

B. The Relevant Geographic Market

    15. Defendants market and sell textbooks and ancillary materials 
for use in courses taught at higher education institutions throughout 
the United States. Market participants for each relevant product market 
alleged herein are those publishers from which instructors select 
textbooks and ancillary materials for use as primary teaching materials 
in their courses. A hypothetical monopolist of the textbooks and 
ancillary materials sold for use in any Overlap Course in the United 
States could profitably lower the rate of quality improvements in and/
or increase the price of such textbooks and ancillary materials in the 
United States. For each relevant product market alleged herein, the 
United States constitutes a relevant geographic market pursuant to 
Section 7 of the Clayton Act.

C. Anti Competitive Effects: Loss of Price and Product Quality 
Competition

    16. In each relevant product and geographic market alleged herein, 
Cengage and HM College offer leading textbooks and ancillary materials 
that are close substitutes for a significant number of customers in 
that market. In each such market, Cengage and HM College are among the 
few firms with a significant presence that compete to provide textbooks 
and ancillary materials and consistently account for at least 35 
percent of all sales. Using a standard concentration measure called the 
Herfindahl-Hirschman Index (or ``HHI,'' defined and explained in 
Appendix B), the proposed acquisition would substantially raise market 
concentration in highly concentrated markets, increasing the HHI by 
more than 500 and producing a post-merger HHI in excess of 3000 in each 
relevant market.
    17. Cengage and HM College compete head-to-head to be selected by 
instructors to provide textbooks and ancillary materials for each 
Overlap Course in the United States. This competition has provided 
significant

[[Page 34950]]

incentives for each to publish new titles and improve product quality 
and has disciplined pricing decisions. The proposed acquisition would 
eliminate this competition in each relevant market, increasing the 
likelihood that Cengage will unilaterally increase prices or reduce its 
investment or other efforts to develop new or improved textbooks and 
ancillary materials.
    18. The proposed acquisition is likely to substantially lessen 
competition in the development, publication, and sale of textbooks and 
ancillary materials in each of the relevant markets, in violation of 
Section 7 of the Clayton Act.

D. Entry: New Entrants Will Not Defeat an Exercise of Market Power

    19. In each relevant product and geographic market alleged herein, 
there is unlikely to be timely entry by any firm that would be 
sufficient to defeat the likely anticompetitive effects of the proposed 
acquisition. Successful entry into developing, publishing, and selling 
textbooks and ancillary materials in each of the relevant markets is 
difficult, time-consuming, and costly.
    20. Successful entry generally can be achieved only over many years 
and after at least one or more textbook revision cycles. Significant 
investment and effort are required to assemble authors, editorial 
staff, and reviewing professors, to develop and obtain licenses to 
copyrighted content and ancillary educational materials, and to train a 
knowledgeable sales force. The outcome of such effort would be highly 
uncertain because, among other things, the reputation of a successful 
incumbent textbook is difficult for a publisher of a new textbook to 
challenge. The leading textbooks in each relevant market have been 
published for some time and are well-known to instructors. Most 
instructors switch textbooks infrequently because they develop course 
syllabi, lesson plans, homework, tests, and other materials that 
conform to the textbooks they use, and changing textbooks usually 
requires modifications to course syllabi and other materials.

V. Violations Alleged

    21. The United States incorporates the allegations of paragraphs 1 
through 20 above.
    22. The proposed acquisition of HM College by Cengage would 
substantially lessen competition in interstate trade and commerce in 
violation of section 7 of the Clayton Act, 15 U.S.C. 18.
    23. Unless restrained, the acquisition would likely have the 
following anticompetitive effects, among others:
    a. Actual and future competition between Cengage and Houghton 
Mifflin in the development, publication, and sale of textbooks and 
ancillary materials in each relevant product and geographic market 
alleged herein will be eliminated;
    b. Competition in the development, publication, and sale of 
textbooks and ancillary materials in each relevant market will be 
substantially lessened; and
    c. The rate of quality improvements in the textbooks and ancillary 
materials in each relevant market likely will decline and/or prices for 
such textbooks and ancillary materials likely will increase.

VI. Request for Relief

    24. The United States requests that this Court:
    a. Adjudge and decree the proposed acquisition to violate section 7 
of the Clayton Act, 15 U.S.C. 18;
    b. Enjoin and restrain the Defendants and all persons acting on 
their behalf from consummating the proposed acquisition or from 
entering into or carrying out any contract, agreement, plan, or 
understanding, the effect of which would be to combine HM College with 
the operations of Cengage;
    c. Award the United States its costs for this action; and
    d. Grant the United States such other and further relief as the 
Court deems just and proper.

Respectfully submitted,

For Plaintiff United States of America:
Thomas O. Barnett (D.C. Bar 426840),
Assistant Attorney General.
James J. Tierney (D.C. Bar 434610), Chief, Networks & 
Technology Enforcement Section.
David L. Meyer (D.C. Bar 414420), Deputy Assistant Attorney 
General.

Scott A. Scheele (D.C. Bar 429061), Assistant Chief, Networks 
& Technology Enforcement Section.

Patricia A. Brink, Deputy Director of Operations.

Janet J. Brody.
Justine K. Donahue (D.C. Bar 476255).
Aaron Comenetz (D.C. Bar 479572).
John C. Filippini (D.C. Bar 165159).
Kent Brown.
Aaron Brodsky.
    Attorneys, Networks & Technology Enforcement Section.
Antitrust Division, United States Department of Justice, 600 B Street, 
NW., Suite 9500, Washington, DC 20530, (202) 307-6200, Dated: May 28, 
2008.

Appendix A

Overlap Courses

Business: Introductory.
Foreign Languages and Literature: French: Language: Business French.
Foreign Languages and Literature: French: Language: Intermediate.
Foreign Languages and Literature: German: Language: Grammar.
Foreign Languages and Literature: Italian: Language: Elementary.
Foreign Languages and Literature: Italian: Language: Intermediate.
History: Western Civilization Survey: 1500 to Present.
History: Western Civilization Survey: 1750 to Present.
History: Western Civilization Survey: Prehistory to 1715.
History: Western Civilization Survey: Prehistory to Present.
History: World History Survey: 1400 to 1750.
History: World History Survey: 1500 to Present.
History: World History Survey: Prehistory to Present.
Interdisciplinary Studies: Orientation to College.

Appendix B

Herfindahl-Hirschman Index

    ``HHI'' means the Herfindahl-Hirschman Index, a commonly 
accepted measure of market concentration. It is calculated by 
squaring the market share of each firm competing in the market and 
then summing the resulting numbers. For example, for a market 
consisting of four firms with shares of 30%, 30%, 20%, and 20%, the 
HHI is 2600 (302 + 302 +202 + 202 = 2600). The HHI takes into 
account the relative size distribution of the firms in a market and 
approaches zero when a market consists of a large number of small 
firms. The HHI increases both as the number of firms in the market 
decreases and as the disparity in size between those firms 
increases.
    Markets in which the HHI is between 1000 and 1800 points are 
considered to be moderately concentrated, and those in which the HHI 
is in excess of 1800 points are considered to be highly 
concentrated. See Horizontal Merger Guidelines Sec.  1.51 (revised 
Apr. 8, 1997). Transactions that increase the HHI by more than 100 
points in concentrated markets presumptively raise antitrust 
concerns under the guidelines issued by the U.S. Department of 
Justice and Federal Trade Commission. See id.

The United States District Court for the District of Columbia

United States of America, Plaintiff, v. Cengage Learning Holdings 
I, L.P., Cengage Learning Holdings II L.P., Cengage Learning, Inc., 
Apax/Tl Holdings, LLC, Education Media and Publishing Group 
Limited, and Houghton Mifflin Harcourt Publishing Company, 
Defendants

Case No.: Judge: Case: 1:08-Cv-00899, Assigned To: Bates, John D., 
Assign. Date: 5/28/2008, Description: Antitrust.

Final Judgment

    Whereas, plaintiff, United States of America, filed its Complaint 
on May 28, 2008, and the United States and Defendants, Cengage and 
Houghton

[[Page 34951]]

Mifflin, as defined below, by their respective attorneys, have 
consented to the entry of this Final Judgment without trial or 
adjudication of any issue of fact or law, and without this Final 
Judgment constituting any evidence against or admission by any party 
regarding any issue of fact or law;
    And whereas, Defendants agree to be bound by the provisions of this 
Final Judgment pending its approval by the Court;
    And whereas, the essence of this Final Judgment is the prompt and 
certain divestiture of certain rights or assets by the Defendants to 
assure that competition is not substantially lessened;
    And whereas, the United States requires Defendants to make certain 
divestitures for the purpose of remedying the loss of competition 
alleged in the Complaint;
    And whereas, Defendants have represented to the United States that 
the divestitures required below can and will be made and that 
Defendants will later raise no claim of hardship or difficulty as 
grounds for asking the Court to modify any of the divestiture 
provisions contained below;
    Now Therefore, before any testimony is taken, without trial or 
adjudication of any issue of fact or law, and upon consent of the 
parties, it is ordered, Adjudged and decreed:

I. Jurisdiction

    This Court has jurisdiction over the subject matter and each of the 
parties to this action. The Complaint states a claim upon which relief 
may be granted against Defendants under Section 7 of the Clayton Act, 
as amended (15 U.S.C. 18).

II. Definitions

    As used in this Final Judgment:
    A. ``Cengage'' means Defendants Cengage Learning Holdings I, L.P, a 
limited partnership with its headquarters in Stamford, Connecticut; 
Cengage Learning Holdings II L.P., a limited partnership with its 
headquarters in Stamford, Connecticut, which is controlled by Cengage 
Learning Holdings I, L.P.; Cengage Learning, Inc., a Delaware 
corporation with its headquarters in Stamford, Connecticut, which is 
controlled by Cengage Learning Holdings II L.P.; and Apax/TL Holdings, 
LLC, a Delaware limited liability company that is the general partner 
in Cengage Learning Holdings I, L.P.; their successors, assigns, 
subsidiaries, divisions, groups, affiliates, partnerships, joint 
ventures; and their directors, officers, managers, agents, and 
employees.
    B. ``Houghton Mifflin'' means Defendants Education Media and 
Publishing Group Limited, a Cayman Islands corporation with it 
headquarters in Dublin, Ireland, and Houghton Mifflin Harcourt 
Publishing Company, a Massachusetts corporation with its headquarters 
in Boston, Massachusetts, which is an indirect wholly-owned subsidiary 
of Education Media and Publishing Group Limited; their successors, 
assigns, subsidiaries, divisions, groups, affiliates, partnerships, 
joint ventures; and their directors, officers, managers, agents, and 
employees.
    C. ``Divestiture Assets'' means all of the textbooks described in 
Exhibit A attached hereto and associated ancillary educational 
materials offered or under development by any of the Defendants for use 
with any such textbook. Each textbook includes all versions that are 
customizations of, components of supplements to, derivations of, 
volumes that address specific subjects or periods included in the 
subject matter of, or brief or ``essentials'' versions of the textbook, 
but does not include any customized publication sold prior to the 
filing of the Complaint in this matter that both (i) is not authored or 
co-authored by any author listed in Exhibit A, and (ii) contains 
content from an author identified in, or a textbook described in, 
Exhibit A that comprises less than twenty-five (25) percent of the 
publisher-provided content (hereafter ``Excluded Customized 
Publications''). The associated ancillary educational materials include 
all materials in any form or format offered or under development for 
use with any textbook, including teacher editions or aids, excerpts, 
workbooks, outlines, summaries, study guides, notebooks, charts, audio, 
video, software, CD-ROMs, DVD-ROMs, Internet and broadcast components, 
all other technology components, teacher support and staff development 
materials, and any other materials. The associated ancillary 
educational materials include (i) materials that are or will be offered 
specifically for use with any textbook listed on Exhibit A; (ii) 
materials that are or will be offered primarily for use with any such 
textbook, meaning at least fifty (50) percent of the total units of 
such materials shipped in the United States during the twelve-month 
period prior to the filing of the Complaint in this matter were 
associated with the sale of any such textbook (or for materials still 
under development, meaning at least fifty (50) percent of the total 
units of such materials forecast to be shipped in the United States 
during the twelve-month period following development are forecast to be 
associated with the sale of any such textbook) (hereafter ``Category 
(ii) Ancillary Materials''); and (iii) a one-year, nonexclusive, 
royalty-free license to use materials that have been offered during the 
twelve-month period prior to the filing of the Complaint in this matter 
for use in association with any of the textbooks described in Exhibit A 
but are offered primarily for use with other textbooks, meaning at 
least fifty (50) percent of the units of such materials shipped in the 
United States during the twelve-month period prior to the filing of the 
Complaint in this matter were associated with the sale of other 
textbooks. (The textbooks and associated ancillary educational 
materials are hereafter collectively referred to as ``Divested 
Textbooks.'')
    (1) The Divestiture Assets Include:
    (a) All tangible assets used in the development, production, 
servicing, marketing, distribution, and sale of the Divested Textbooks, 
including, but not limited to, all records relating to historic and 
current research data and activities and development activities 
relating to the Divested Textbooks; all original and digital artwork, 
film plates, and other reproductive materials relating to the Divested 
Textbooks; all manuscripts, illustrations, any other content, and any 
revisions or revision plans thereof in print or digital form; all 
finished inventory; all licenses, permits and authorizations issued by 
any governmental organization relating to the Divested Textbooks; all 
contracts, teaming arrangements, agreements, commitments, 
certifications, and understandings relating to the Divested Textbooks, 
including, but not limited to, author permissions and agreements, 
publishing agreements, research agreements, other similar agreements, 
and supply and distribution agreements; all customer lists, contracts, 
purchase orders, accounts, and credit records, or similar records of 
all sales and potential sales of the Divested Textbooks; all sales 
support and promotional materials, advertising materials, and 
production, sales and marketing files relating to the Divested 
Textbooks; at the option of the Acquirer(s), computers and other 
tangible assets used primarily for the production or distribution of 
the Divested Textbooks; and all performance and all other records 
relating to the Divested Textbooks; and
    (b) All intangible assets used in the development, production, 
servicing, marketing, distribution, and sale of the Divested Textbooks, 
including, but not limited to; all patents, licenses and sublicenses, 
intellectual property,

[[Page 34952]]

copyrights, contract rights, trademarks (registered and unregistered), 
trade names, service marks, service names, including all titles of 
existing products comprising or relating to the Divested Textbooks, but 
only including nonexclusive licenses to use the corporate trademarks or 
trade names of Cengage or Houghton Mifflin sufficient to allow any 
Acquirer to sell finished inventory or other materials that have 
already been marked with such trademarks or trade names; all technical 
information, computer software and related documentation, know-how, 
trade secrets, drawings, blueprints, designs, design protocols, 
specifications for materials, quality assurance and control procedures, 
and manuals used for any purpose relating to the Divested Textbooks or 
that Defendants provide to their own employees, customers, suppliers, 
agents or licensees for use in relation to the Divested Textbooks; and 
all other intangible research data concerning historic and current 
research and development efforts relating to the Divested Textbooks.
    (2) The Divestiture Assets Do Not Include:
    (a) Except to the extent included in the non-exclusive license of 
materials described in Section II.C.(1)(b), the company names, company 
Internet domain names, and company trademarks of Defendants or any of 
their affiliates, or portions or elements thereof, including, but not 
limited to, ``Cengage'', ``South-Western'', ``Wadsworth'', ``Brooks 
Cole'', ``Heinle'', ``Houghton Mifflin'', ``HM'', and ``HMCo'';
    (b) Defendants' employee records that may not be produced under 
applicable law; and
    (c) Originals of books or records, as well as the information 
management systems used to create and store such books and records, 
that Defendants are required by law to retain or that Defendants 
determine are necessary or advisable to retain, provided that copies of 
any such books or records, or data sets that can be accessed by 
information management systems, are provided in a form useable by the 
Acquirer(s), subject to customary confidentiality assurances, to any 
Acquirer(s) or potential Acquirer(s).
    D. ``Acquirer'' or ``Acquirers'' means the entity or entities to 
whom Defendants divest the Divestiture Assets.

III. Applicability

    A. This Final Judgment applies to Cengage and Houghton Mifflin, as 
defined above, and all other persons in active concert or participation 
with any of them who receive actual notice of this Final Judgment by 
personal service or otherwise. Notwithstanding any other provision of 
this Final Judgment, Houghton Mifflin's obligations under sections 
IV.A, IV.H, V.A, V.B, V.D, VI.A shall cease upon completion of its sale 
of the Divestiture Assets to Cengage as part of its sale to Cengage of 
the assets of the Houghton Mifflin College Division.
    B. If prior to complying with sections IV and V of this Final 
Judgment, Defendants sell or otherwise dispose of all or substantially 
all of their assets or of lesser business units that include the 
Divestiture Assets, they shall require the purchaser to be bound by the 
provisions of this Final Judgment. Defendants need not obtain such an 
agreement from the Acquirer(s) of the Divestiture Assets pursuant to 
this Final Judgment.

IV. Divestitures

    A. Defendants are ordered and directed, within forty-five (45) 
calendar days after the filing of the Complaint in this matter, or five 
(5) calendar days after notice of the entry of this Final Judgment by 
the Court, whichever is later, to divest the Divestiture Assets in a 
manner consistent with this Final Judgment to one or more Acquirers 
acceptable to the United States, in its sole discretion. The United 
States, in its sole discretion, may agree to one or more extensions of 
this time period not to exceed thirty (30) calendar days in total, and 
shall notify the Court in such circumstances. Defendants agree to use 
their best efforts to divest the Divestiture Assets as expeditiously as 
possible.
    B. In accomplishing the divestitures ordered by this Final 
Judgment, Defendants promptly shall make known, by usual and customary 
means, the availability of the Divestiture Assets. Defendants shall 
inform any person making inquiry regarding a possible purchase of the 
Divestiture Assets that they are being divested pursuant to this Final 
Judgment and provide that person with a copy of this Final Judgment. 
Defendants shall offer to furnish to all prospective Acquirers, subject 
to customary confidentiality assurances, all information and documents 
relating to the Divestiture Assets customarily provided in a due 
diligence process except such information or documents subject to the 
attorney-client privilege or work-product doctrine. Defendants shall 
make available such information to the United States at the same time 
that such information is made available to any other person.
    C. Defendants shall provide the Acquirer(s) and the United States 
the identity of any personnel responsible for any editorial content of 
any Divestiture Asset, and any personnel involved in the management, 
sale, marketing, development, design, layout, production, research, 
operation, delivery, distribution, acquisition or maintenance of 
licenses or other rights to copyrights or other intellectual property, 
or provision or development of seminars or training activities relating 
to any of the Divestiture Assets, to enable the Acquirer(s) to make 
offers of employment. Defendants will not interfere with any 
negotiations or attempts by the Acquirer(s) to employ or contract with 
any of Defendants' officers, directors, employees, or any other persons 
responsible for any such activity related to any Divestiture Asset and, 
if requested, will release any such person from any non-compete 
agreement with any of the Defendants.
    D. Defendants shall permit prospective Acquirers of the Divestiture 
Assets to have reasonable access to personnel responsible for the 
Divestiture Assets (as described in section IV.C of this Final 
Judgment); and to have access to any and all financial, operational, or 
other documents and information customarily provided as part of a due 
diligence process.
    E. Defendants shall warrant to all Acquirers of the Divestiture 
Assets that each asset is complete, intact, fully functional and 
operational on the date of sale, provided that, for any asset that is 
in development at the time of sale, Defendants shall describe the 
extent to which the asset is complete, intact, functional and 
operational and project the amount of time, money and effort required 
to complete the development. Defendants shall warrant to all Acquirers 
of the Divestiture Assets that each asset has been preserved, 
maintained, developed, sold, and operated as required by the Asset 
Preservation Stipulation and Order filed simultaneously with the Court.
    F. Defendants shall not take any action that will impede in any way 
the permitting, publication, marketing, sale, development, 
administration, acquisition or maintenance of related licenses or other 
rights to copyrights or other intellectual property, function, 
operation or divestiture of the Divestiture Assets. Defendants shall 
use their best efforts to facilitate the assignment to the Acquirer(s) 
of all of the tangible and intangible assets included in the 
Divestiture Assets that Defendants presently hold or use pursuant to a 
license or any other agreement.

[[Page 34953]]

    G. Defendant Cengage shall have the right to obtain from the 
Acquirer(s) of the Divestiture Assets:
    (1) With respect to each Excluded Customized Publication, a one-
year, non-exclusive, royalty-free license to continue to include in 
that publication Divestiture Asset-related content;
    (2) With respect to Category (ii) Ancillary Materials, a one-year, 
non-exclusive, royalty-free license to continue to sell such materials 
in association with textbooks that are not described on Exhibit A 
where, prior to the filing of the Complaint in this matter, such 
materials were sold in association with those textbooks; and
    (3) With respect to copyrighted art, photographs, illustrations, 
charts, graphs, or other similar content that, at the time of the 
filing of the Complaint in this matter, were included within both the 
Divestiture Assets and other textbooks and products (other than content 
written, developed produced or copyrighted by, or otherwise 
attributable to, (i) any author identified in Exhibit A with respect to 
any course associated with that author in Exhibit A, or (ii) the 
author's co-authors or successor authors), a non-exclusive, royalty-
free license to continue to use such content (i) in the other textbooks 
and products in which it is now included, (ii) in future textbooks and 
ancillary educational materials other than textbooks and materials 
offered for use in any course listed in Exhibit A, and (iii) with the 
permission of the Acquirer(s) of all of the Divested Assets applicable 
to any course listed in Exhibit A, in future textbooks and ancillary 
materials for use in that course.
    H. Unless the United States otherwise consents in writing, the 
divestitures pursuant to section IV, or by trustee appointed pursuant 
to section V, of this Final Judgment, shall include the entire 
Divestiture Assets, and shall be accomplished in such a way as to 
satisfy the United States, in its sole discretion, that the Divestiture 
Assets can and will be used by the Acquirer(s) as part of a viable, 
ongoing higher education textbook publishing business. Divestiture of 
the Divestiture Assets may be made to one or more Acquirers, provided 
that in each instance it is demonstrated to the sole satisfaction of 
the United States that the Divestiture Assets will remain viable and 
the divestiture of such assets will remedy the competitive harm alleged 
in the Complaint. The divestitures, whether pursuant to section IV or 
section V of this Final Judgment:
    (1) Shall be made to an Acquirer(s) that, in the United States's 
sole judgment, has the intent and capability (including the necessary 
managerial, operational, technical and financial capability) of 
competing effectively in the higher education textbook publishing 
business; and
    (2) Shall be accomplished so as to satisfy the United States, in 
its sole discretion, that none of the terms of any agreement between an 
Acquirer(s) and Defendants give Defendants the ability unreasonably to 
raise the Acquirer's costs, to lower the Acquirer's efficiency, or 
otherwise to interfere in the ability of the Acquirer to compete 
effectively.

V. Appointment of Trustee

    A. If Defendants have not divested the Divestiture Assets within 
the time period specified in section IV.A of this Final Judgment, 
Defendants shall notify the United States of that fact in writing. Upon 
application of the United States, the Court shall appoint a trustee 
selected by the United States and approved by the Court to effect the 
divestiture of the Divestiture Assets.
    B. After the appointment of a trustee becomes effective, only the 
trustee shall have the right to sell the Divestiture Assets. The 
trustee shall have the power and authority to accomplish the 
divestiture to an Acquirer(s) acceptable to the United States at such 
price and on such terms as are then obtainable upon reasonable effort 
by the trustee, subject to the provisions of sections IV, V, and VI of 
this Final Judgment, and shall have such other powers as this Court 
deems appropriate. Subject to section V.D of this Final Judgment, the 
trustee may hire at the cost and expense of Defendants any investment 
bankers, attorneys, or other agents, who shall be solely accountable to 
the trustee, reasonably necessary in the trustee's judgment to assist 
in the divestitures.
    C. Defendants shall not object to a sale by the trustee on any 
ground other than the trustee's malfeasance. Any such objections by 
Defendants must be conveyed in writing to the United States and the 
trustee within ten (10) calendar days after the trustee has provided 
the notice required under section VI of this Final Judgment.
    D. The trustee shall serve at the cost and expense of Defendants, 
on such terms and conditions as the United States approves, and shall 
account for all monies derived from the sale of the assets sold by the 
trustee and all costs and expenses so incurred. After approval by the 
Court of the trustee's accounting, including fees for its services and 
those of any professionals and agents retained by the trustee, all 
remaining money shall be paid to Defendants and the trust shall then be 
terminated. The compensation of the trustee and any professionals and 
agents retained by the trustee shall be reasonable in light of the 
value of the Divestiture Assets and based on a fee arrangement 
providing the trustee with an incentive based on the price and terms of 
the divestiture and the speed with which it is accomplished, but 
timeliness is paramount.
    E. Defendants shall use their best efforts to assist the trustee in 
accomplishing the required divestitures. The trustee and any 
consultants, accountants, attorneys, and other persons retained by the 
trustee shall have full and complete access to the personnel, books, 
records, and facilities of the businesses to be divested, and 
Defendants shall develop financial and other information relevant to 
such businesses as the trustee may reasonably request, subject to 
reasonable protection for trade secrets or other confidential research, 
development, or commercial information. Defendants shall take no action 
to interfere with or to impede the trustee's accomplishment of the 
divestitures.
    F. After its appointment, the trustee shall file monthly reports 
with the United States and the Court setting forth the trustee's 
efforts to accomplish the divestitures ordered under this Final 
Judgment. To the extent such reports contain information that the 
trustee deems confidential, such reports shall not be filed in the 
public docket of the Court. Such reports shall include the name, 
address, and telephone number of each person who, during the preceding 
month, made an offer to acquire, expressed an interest in acquiring, 
entered into negotiations to acquire, or was contacted or made an 
inquiry about acquiring, any interest in the Divestiture Assets, and 
shall describe in detail each contact with any such person. The trustee 
shall maintain full records of all efforts made to divest the 
Divestiture Assets.
    G. If the trustee has not accomplished the divestitures ordered 
under this Final Judgment within six (6) months after its appointment, 
the trustee shall promptly file with the Court a report setting forth: 
(1) The trustee's efforts to accomplish the required divestitures, (2) 
the reasons, in the trustee's judgment, why the required divestitures 
have not been accomplished, and (3) the trustee's recommendations. To 
the extent such reports contain information that the trustee deems 
confidential, such reports shall not be filed in the public docket of 
the Court. The trustee shall at the same time furnish such report to 
the United States, which shall have the right to make additional

[[Page 34954]]

recommendations consistent with the purpose of the trust. The Court 
thereafter shall enter such orders as it shall deem appropriate to 
carry out the purpose of the Final Judgment, which may, if necessary, 
include extending the trust and the term of the trustee's appointment 
by a period requested by the United States.

VI. Notice of Proposed Divestitures

    A. Within two (2) business days following execution of a definitive 
divestiture agreement, Defendants or the trustee, whichever is then 
responsible for effecting the divestitures required herein, shall 
notify the United States of any proposed divestiture(s) required by 
section IV or V of this Final Judgment. If the trustee is responsible, 
it shall similarly notify Defendants. The notice shall set forth the 
details of the proposed divestiture(s) and list the name, address, and 
telephone number of each person not previously identified who offered 
or expressed an interest in or desire to acquire any ownership interest 
in the Divestiture Assets, together with full details of the same.
    B. Within fifteen (15) calendar days of receipt by the United 
States of such notice, the United States may request from Defendants, 
the proposed Acquirer(s), any other third party, or the trustee, if 
applicable, additional information concerning the proposed 
divestiture(s), the proposed Acquirer(s), and any other potential 
Acquirer. Defendants and the trustee shall furnish any additional 
information requested within fifteen (15) calendar days of the receipt 
of the request, unless the parties shall otherwise agree.
    C. Within thirty (30) calendar days after receipt of the notice or 
within twenty (20) calendar days after the United States has been 
provided the additional information requested from Defendants, the 
proposed Acquirer(s), any third party, and the trustee, whichever is 
later, the United States shall provide written notice to Defendants and 
the trustee, if there is one, stating whether or not it objects to the 
proposed divestiture(s). If the United States provides written notice 
that it does not object, the divestiture(s) may be consummated, subject 
only to Defendants' limited right to object to the sale under section 
V.C of this Final Judgment. Absent written notice that the United 
States does not object to the proposed Acquirer or upon objection by 
the United States, a divestiture proposed under section IV or section V 
of this Final Judgment shall not be consummated. Upon objection by 
Defendants under section V.C, a divestiture proposed under section V 
shall not be consummated unless approved by the Court.

VII. Financing

    Defendants shall not finance all or any part of any purchase made 
pursuant to section IV or section V of this Final Judgment.

VIII. Preservation of Assets

    Until the divestitures required by this Final Judgment have been 
accomplished, Defendants shall take all steps necessary to comply with 
the Asset Preservation Stipulation and Order entered by this Court. 
Defendants shall take no action that would jeopardize the divestitures 
ordered by this Court.

IX. Affidavits

    A. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, and every thirty (30) calendar days thereafter until 
the divestitures have been completed under section IV or section V of 
this Final Judgment, Defendants shall deliver to the United States an 
affidavit as to the fact and manner of its compliance with section IV 
or section V. Each such affidavit shall include the name, address, and 
telephone number of each person who, during the preceding thirty (30) 
calendar days, made an offer to acquire, expressed an interest in 
acquiring, entered into negotiations to acquire, or was contacted or 
made an inquiry about acquiring, any interest in the Divestiture 
Assets, and shall describe in detail each contact with any such person 
during that period. Each such affidavit shall also include a 
description of the efforts Defendants have taken to solicit buyers for 
the Divestiture Assets, and to provide required information to 
prospective Acquirers, including the limitations, if any, on such 
information. Assuming the information set forth in the affidavit is 
true and complete, any objection by the United States to information 
provided by Defendants, including limitations on information, shall be 
made within fourteen (14) calendar days of receipt of such affidavit.
    B. Within twenty (20) calendar days of the filing of the Complaint 
in this matter, Defendants shall deliver to the United States an 
affidavit that describes in reasonable detail all actions Defendants 
have taken and all steps Defendants have implemented on an ongoing 
basis to comply with section VIII of this Final Judgment. Defendants 
shall deliver to the United States an affidavit describing any changes 
to the efforts and actions outlined in Defendants' earlier affidavits 
filed pursuant to this section within fifteen (15) calendar days after 
the change is implemented.
    C. Defendants shall keep all records of all efforts made to 
preserve and divest the Divestiture Assets until one year after such 
divestitures have been completed.

X. Compliance Inspection

    A. For the purposes of determining or securing compliance with this 
Final Judgment, or of determining whether the Final Judgment should be 
modified or vacated, and subject to any legally recognized privilege, 
from time to time authorized representatives of the United States 
Department of Justice, including consultants and other persons retained 
by the United States, shall, upon written request of an authorized 
representative of the Assistant Attorney General in charge of the 
Antitrust Division, and on reasonable notice to Defendants, be 
permitted:
    (1) Access during Defendants' regular office hours to inspect and 
copy, or at the option of the United States, to require Defendants to 
provide electronic or hard copies of, all books, ledgers, accounts, 
records, data, and documents in the possession, custody, or control of 
Defendants, relating to any matters contained in this Final Judgment; 
and
    (2) To interview, either informally or on the record, Defendants' 
officers, employees, or agents, who may have their individual counsel 
present, regarding such matters. The interviews shall be subject to the 
reasonable convenience of the interviewee and without restraint or 
interference by Defendants.
    B. Upon the written request of an authorized representative of the 
Assistant Attorney General in charge of the Antitrust Division, 
Defendants shall submit written reports or responses to written 
interrogatories, under oath if requested, relating to any of the 
matters contained in this Final Judgment as may be requested.
    C. No information or documents obtained by the means provided in 
this section shall be divulged by the United States to any person other 
than an authorized representative of the executive branch of the United 
States, except in the course of legal proceedings to which the United 
States is a party (including grand jury proceedings), or for the 
purpose of securing compliance with this Final Judgment, or as 
otherwise required by law.
    D. If at the time information or documents are furnished by 
Defendants to the United States, Defendants represent and identify in 
writing the material in any such information or

[[Page 34955]]

documents to which a claim of protection may be asserted under Rule 
26(c)(7) of the Federal Rules of Civil Procedure, and Defendants mark 
each pertinent page of such material, ``Subject to claim of protection 
under Rule 26(c)(7) of the Federal Rules of Civil Procedure,'' then the 
United States shall give Defendants ten (10) calendar days notice prior 
to divulging such material in any legal proceeding (other than a grand 
jury proceeding).

XI. No Reacquisition

    Defendant Cengage may not reacquire any part of the Divestiture 
Assets during the term of this Final Judgment.

XII. Retention of Jurisdiction

    This Court retains jurisdiction to enable any party to this Final 
Judgment to apply to this Court at any time for further orders and 
directions as may be necessary or appropriate to carry out or construe 
this Final Judgment, to modify any of its provisions, to enforce 
compliance, and to punish violations of its provisions.

 XIII. Expiration of Final Judgment

    Unless this Court grants an extension, this Final Judgment shall 
expire ten (10) years from the date of its entry.

XIV. Public Interest Determination

    Entry of this Final Judgment is in the public interest. The parties 
have complied with the requirements of the Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16, including making copies available to the 
public of this Final Judgment, the Competitive Impact Statement, and 
any comments thereon and the United States's responses to comments. 
Based upon the record before the Court, which includes the Competitive 
Impact Statement and any comments and response to comments filed with 
the Court, entry of this Final Judgment is in the public interest.
    Date:
    Court approval subject to procedures of Antitrust Procedures and 
Penalties Act, 15 U.S.C. 16.
    United States District Judge.

Exhibit A

------------------------------------------------------------------------
            Course                             Textbooks
------------------------------------------------------------------------
Business: Introductory.......  All textbooks that relate to the study of
                                introduction to business with which
                                Louis Boone has been or will be
                                associated, and all textbooks that
                                relate to the study of introduction to
                                business with which David Kurtz has been
                                or will be associated.
Foreign Languages and          All textbooks with which Jean-Luc
 Literature: French:            Penfornis has been or will be
 Language: Business French.     associated.
Foreign Languages and          All textbooks that relate to the study of
 Literature: French:            French language or literature at the
 Language: Intermediate.        intermediate level with which Michael
                                Oates has been or will be associated,
                                all textbooks with which Jacques Dubois
                                has been or will be associated, all
                                textbooks with which Simone Renaud has
                                been or will be associated, all
                                textbooks with which Dominique Van Hooff
                                has been or will be associated, all
                                textbooks that relate to the study of
                                French language or literature at the
                                intermediate level with which Jean-Paul
                                Valette has been or will be associated,
                                and all textbooks that relate to the
                                study of French language, or literature
                                at the intermediate level with which
                                Rebecca Valette has been or will be
                                associated.
Foreign Languages and          All textbooks with which Kimberly Sparks
 Literature: German:            has been or will be associated, and all
 Language: Grammar.             textbooks with which Van Horn Vail has
                                been or will be associated.
Foreign Languages and          All textbooks with which Marcel Danesi
 Literature: Italian:           has been or will be associated, and all
 Language: Elementary.          textbooks with which Suzanne Branciforte
                                has been or will be associated.
Foreign Languages and          All textbooks with which Marcel Danesi
 Literature: Italian:           has been or will be associated, and all
 Language: Intermediate.        textbooks with which Francesca Italiano
                                has been or will be associated.
History: Western Civilization  All textbooks with which John McKay has
 Survey: 1500 to Present.       been or will be associated.
History: Western Civilization  All textbooks with which John McKay has
 Survey: 1750 to Present.       been or will be associated.
History: Western Civilization  All textbooks with which John McKay has
 Survey: Prehistory to 1715.    been or will be associated.
History: Western Civilization  All textbooks with which John McKay has
 Survey: Prehistory to          been or will be associated.
 Present.
History: World History         All textbooks with which John McKay has
 Survey: 1400 to 1750.          been or will be associated.
History: World History         All textbooks with which John McKay has
 Survey: 1500 to Present.       been or will be associated.
History: World History         All textbooks with which John McKay has
 Survey: Prehistory to          been or will be associated.
 Present.
Interdisciplinary Studies:     All textbooks with which John Gardner has
 Orientation to College.        been or will be associated.
------------------------------------------------------------------------


[[Page 34956]]

The United States District Court for the District of Columbia

United States of America, Plaintiff, v. Cengage Learning Holdings I, 
L.P., Cengage Learning Holdings II L.P., Cengage Learning, Inc., Apax/
Tl Holdings, LLC, Education Media and Publishing Group Limited, and 
Houghton Mifflin Harcourt Publishing Company, Defendants

Case No.: Judge: Case: 1:08Cv-00899, Assigned To: Bates, John D., 
Assign. Date: 5/28/2008, Description: Antitrust.

Competitive Impact Statement

    Plaintiff United States of America (``United States''), pursuant to 
section 2(b) of the Antitrust Procedures and Penalties Act (``APPA'' or 
``Tunney Act''), 15 U.S.C. 16(b)-(h), files this Competitive Impact 
Statement relating to the proposed Final Judgment submitted for entry 
in this civil antitrust proceeding.

I. Nature and Purpose of the Proceeding

    The United States filed a civil antitrust Complaint on May 28, 
2008, seeking to enjoin the proposed acquisition by Cengage Learning, 
Inc., and related entities (collectively ``Cengage''), of the assets of 
the Houghton Mifflin College Division (``HM College'') from Houghton 
Mifflin Harcourt Publishing Company, and a related entity (collectively 
``Houghton Mifflin''). The Complaint alleges that the likely effects of 
this acquisition would be to substantially lessen competition in the 
development, publication, and sale of textbooks and ancillary 
educational materials (collectively ``textbooks and ancillary 
materials'') used in fourteen higher education courses listed in 
Appendix A (hereinafter ``the Overlap Courses''), in violation of 
section 7 of the Clayton Act, 15 U.S.C. 18. The loss of competition 
caused by the acquisition would likely result in a reduced rate of 
quality improvements in, and/or increased prices for, the textbooks and 
ancillary materials used in each of the fourteen courses in the United 
States.
    At the same time the Complaint was filed, the United States also 
filed an Asset Preservation Stipulation and Order (``APSO'') and a 
proposed Final Judgment, which are designed to eliminate the 
anticompetitive effects of the acquisition. Under the proposed Final 
Judgment, which is explained more fully below, the Defendants are 
required to divest all tangible and intangible assets used in the 
development, production, servicing, marketing, distribution and sale of 
certain textbooks in the Overlap Courses and all associated ancillary 
educational materials (collectively ``Divestiture Assets''). Until the 
divestitures required by the Final Judgment have been accomplished, the 
APSO requires the Defendants to preserve and maintain the value of and 
goodwill in the Divestiture Assets, and continue to operate the 
Divestiture Assets as economically viable, competitive, and ongoing 
business properties.
    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered after compliance with the APPA. Entry of 
the proposed Final Judgment would terminate this action, except that 
the Court would retain jurisdiction to construe, modify, or enforce the 
provisions of the proposed Final Judgment and to punish violations 
thereof.

II. Description of the Events Giving Rise to the Alleged Violations

A. The Defendants and the Proposed Transaction

    Cengage Learning, Inc. is a Delaware corporation with its 
headquarters in Stamford, Connecticut. Cengage Learning Holdings I, 
L.P., a limited partnership with its headquarters in Stamford, 
Connecticut, is the ultimate parent entity of Cengage Learning, Inc. 
Cengage Learning Holdings II L.P., a limited partnership with its 
headquarters in Stamford Connecticut, is an intermediate entity between 
Cengage Learning Holdings I, L.P. and Cengage Learning, Inc. Apax/TL 
Holdings, LLC, a Delaware limited liability company, is the general 
partner in Cengage Learning Holdings I, L.P. The above entities 
(collectively ``Cengage'') develop, publish and sell textbooks and 
ancillary materials for use in the United States and elsewhere. Cengage 
is the second largest publisher of textbooks and ancillary materials 
used in courses taught at higher education institutions in the United 
States and ranks among the top three sellers of such textbooks and 
materials for each of the Overlap Courses. Cengage had total revenues 
of about $1.7 billion in the twelve-month period ending September 30, 
2007, including about $1 billion in revenues from the sale of higher 
education textbooks and ancillary materials.
    Houghton Mifflin Harcourt Publishing Company (formerly Houghton 
Mifflin Company) is a Massachusetts corporation with its headquarters 
in Boston, Massachusetts. Education Media and Publishing Group Limited, 
a Cayman Islands corporation with its headquarters in Dublin, Ireland, 
is the ultimate parent entity of Houghton Mifflin Harcourt Publishing 
Company. The above entities (collectively ``Houghton Mifflin''), 
develop, publish and sell textbooks and ancillary materials for use in 
the United States and elsewhere. Houghton Mifflin's HM College Division 
is the fifth largest publisher of textbooks and ancillary materials 
used in courses taught at higher education institutions in the United 
States and ranks among the top three sellers of such textbooks and 
materials for each of the Overlap Courses. Houghton Mifflin has total 
annual revenues of about $2.5 billion, and estimated 2007 revenues of 
about $230 million from the sale of textbooks and ancillary materials 
by HM College.
    On or about November 30, 2007, Cengage and Houghton Mifflin entered 
into an agreement for Cengage to acquire the assets of HM College for 
approximately $750 million.

B. The Competitive Effects of the Transaction

1. Textbooks and Ancillary Materials
    Publishers market and sell textbooks and ancillary materials for 
use in courses taught at higher education institutions. In most cases, 
instructors select the textbooks and ancillary materials that will be 
used for their courses, and students buy the selected textbooks and 
ancillary materials.
    Textbooks are often supplemented with ancillary educational 
materials, such as teacher's editions, audio-visual teaching tools, 
Internet content, CD-ROMs, workbooks, and study guides. These ancillary 
materials are often offered by publishers for free or as part of a 
discounted package to induce instructors to select a particular 
textbook and to induce students to purchase the publisher's textbooks 
and ancillary materials. Textbooks and ancillary materials are used as 
the primary teaching materials in each of the Overlap Courses.
2. Relevant Product Markets
    The Complaint alleges that for each Overlap Course, the textbooks 
and ancillary materials for that course constitute a separate relevant 
product market and a line of commerce pursuant to section 7 of the 
Clayton Act.
    Textbooks and ancillary materials are used as the primary teaching 
materials in each of the Overlap courses. Textbooks provide the core 
written material for the Overlap Courses and serve as the foundation 
for instructors' overall lesson plans. While instructors could use 
alternative teaching materials (such as copies of lecture notes and

[[Page 34957]]

articles), they generally select textbooks to serve as the primary 
teaching materials for their courses because accessing and creating 
alternative teaching materials is often a more time-consuming, costly, 
and inefficient method of delivering high quality content to their 
students. Instructors using textbooks and ancillary materials would not 
turn to any alternative teaching materials in sufficient numbers to 
defeat a small but significant increase in the price of any textbooks 
and ancillary materials for the Overlap Courses, or a small but 
significant decrease in the quality of such textbooks and other 
materials.
    Students taking the Overlap Courses are unlikely to have any 
significant alternatives to purchasing new textbooks for their Overlap 
Courses. Although used textbooks, if available, can sometimes serve as 
alternatives for new textbooks, used textbooks are not uniformly 
available in large numbers. Moreover, instructors often require 
students to use the newest textbook editions. Publishers generally 
revise textbooks every three to four years, and revised textbooks often 
differ substantially from their prior edition, limiting the extent to 
which used textbooks may be substituted for new editions of the same 
textbooks. Students would not turn to purchasing used textbooks in 
sufficient numbers to defeat a small but significant increase in the 
price of a new edition of the textbooks.
3. Relevant Geographic Market
    The Complaint alleges that Defendants market and sell textbooks and 
ancillary materials for use in courses taught at higher education 
institutions throughout the United States. Market participants for each 
relevant product market alleged in the Complaint are those publishers 
from which instructors select textbooks and ancillary materials for use 
as primary teaching materials in their courses. A hypothetical 
monopolist of the textbooks and ancillary materials sold for use in any 
Overlap Course in the United States could profitably lower the rate of 
quality improvements in, or increase the price of, such textbooks and 
ancillary materials in the United States. Therefore, for each relevant 
product market alleged in the Complaint, the United States constitutes 
a relevant geographic market pursuant to section 7 of the Clayton Act.
4. Anticompetitive Effects of the Acquisition
    In each relevant product and geographic market alleged in the 
Complaint, Cengage and HM College offer leading textbooks and ancillary 
materials that are close substitutes for a significant number of 
customers in that market. In each such market, Cengage and HM College 
are among the few firms with a significant presence that compete to 
provide textbooks and ancillary materials, and together they account 
for at least 35 percent of all sales. Using a standard concentration 
measure called the Herfindahl-Hirschman Index (``HHI''), the proposed 
acquisition would substantially raise market concentration in highly 
concentrated markets, increasing the HHI by more than 500 and producing 
a post-merger HHI in excess of 3000 in each relevant market.
    Cengage and HM College compete head-to-head to have their textbooks 
and ancillary materials selected by instructors for each Overlap Course 
in the United States. This competition has provided significant 
incentives for each to publish new titles and improve product quality, 
and it has also disciplined pricing decisions. Although textbooks are 
purchased by students who do not select the books, the Department's 
investigation revealed that when institutions and instructors request 
price concessions at the time they are selecting textbooks, publishers 
such as Cengage and HM College have competed to provide them. The 
proposed acquisition would eliminate the competition between Cengage 
and HM College in each relevant market, increasing the likelihood that 
Cengage will unilaterally increase prices or reduce its investment or 
other efforts to develop new or improved textbooks and ancillary 
materials.
    The proposed acquisition therefore is likely to substantially 
lessen competition in the development, publication, and sale of 
textbooks and ancillary materials in each of the relevant markets 
alleged in the Complaint, in violation of section 7 of the Clayton Act.
5. Entry Would Not Likely Constrain the Acquisition's Adverse Effects
    The Complaint alleges that, in each of the relevant product and 
geographic markets, there is unlikely to be timely entry by any firm 
that would be sufficient to defeat the likely anticompetitive effects 
of the proposed acquisition. Successful entry into developing, 
publishing, and selling textbooks and ancillary materials in each of 
the relevant markets is difficult, time-consuming, and costly.
    Successful entry generally can be achieved only over many years and 
after at least one or more textbook revision cycles. Significant 
investment and effort are required to assemble authors, editorial staff 
and reviewing professors, to develop and obtain licenses to copyrighted 
content and ancillary educational materials, and to train a 
knowledgeable sales force. The outcome of any such effort would be 
highly uncertain, because, among other things, the reputation of a 
successful incumbent textbook is difficult for a publisher of a new 
textbook to challenge. The leading textbooks in each relevant market 
have been published for some time and are well-known to instructors. 
Most instructors switch textbooks infrequently because they develop 
course syllabi, lesson plans, homework, tests, and other materials that 
conform to the textbooks they use, and changing textbooks often 
requires modifications to course syllabi and other materials.

III. Explanation of the Proposed Final Judgment

A. The Required Divestitures

    Section IV.A of the proposed Final Judgment requires that the 
Defendants divest the existing or future textbooks described in 
Appendix A, which are used in the Overlap Courses, and associated 
ancillary educational materials used with those textbooks. The 
Divestiture Assets may be sold to more than one acquirer with approval 
of the United States. Section II.C specifies that the divested 
textbooks include all supplements to, derivations of, and customized 
versions of the textbooks, except the Defendants are not required to 
divest existing publications that were customized for specific 
institutions that contain only a small amount of content (less than 
25%) written by an author listed on Appendix A. The description of 
Divestiture Assets in Section II.C will ensure that the acquirer or 
acquirers shall have access to all ancillary educational materials 
offered with a divested textbook. The Defendants are required to divest 
all associated ancillary materials offered specifically or primarily 
for use with the textbooks. With respect to other ancillary educational 
materials that are offered primarily for use with Defendants' other 
textbooks, but are also offered with divested textbooks, the Defendants 
are required to grant the acquirer(s) a one-year license to use any 
such materials. To the extent an acquirer desires to continue to 
provide these other ancillary materials to instructors and students who 
use a divested textbook, the one-year license is intended to provide 
the acquirer a sufficient period of time to continue selling the

[[Page 34958]]

Defendants' materials while it develops substitute materials.
    The Divestiture Assets also include all tangible and intangible 
assets related to the divested textbooks and any ancillary educational 
materials associated with those textbooks. For example, section 
II.C(1)(a) provides that the Divestiture Assets include, among other 
things, all original artwork, illustrations and other content, and all 
contracts, author permissioning agreements and other agreements related 
to the divested textbooks and ancillary materials. In addition, section 
II.C(1)(b) provides that the Divestiture Assets include, among other 
things, licenses and sublicenses to intellectual property of any kind 
that is used in the development, production, servicing, marketing, 
distribution, and sale of any of the divested textbooks or ancillary 
materials.
    The Divestiture Assets do not include Defendants' company names or 
trademarks, except that the Divestiture Assets include nonexclusive 
licenses to use the corporate trademarks or trade names of Cengage or 
Houghton Mifflin sufficient to allow the acquirer(s) to sell finished 
inventory or other materials that have already been marked with such 
trademarks or trade names. This provision will ensure that the 
acquirer(s) will not infringe the Defendants' intellectual property 
rights in the course of distributing the finished inventory.
    Sale of the Divestiture Assets according to the terms of the 
proposed Final Judgment will preserve competition between the textbooks 
and ancillary materials to be divested and the textbooks and ancillary 
materials that Cengage will retain and will thus eliminate the 
anticompetitive effects of the proposed acquisition in each relevant 
market alleged in the Complaint. In each of the Overlap Courses, the 
textbooks to be divested, alone or in combination with each other, are 
among the leading textbooks sold by Defendants. For several of the 
Overlap Courses, the Final Judgment requires the divestiture of all of 
the significant textbooks Cengage or HM College offers for sale. For 
others, the textbooks to be divested are the publications by one 
Defendant that are close substitutes with textbooks offered by the 
other Defendant, and thus as to which there is meaningful competition 
between Cengage and HM College that would have been eliminated by the 
proposed acquisition.

B. Selected Provisions of the Proposed Final Judgment

    In antitrust cases involving acquisitions in which the United 
States seeks a divestiture remedy, the United States seeks to require 
completion of the divestiture(s) within the shortest period of time 
reasonable under the circumstances. A quick divestiture has the 
benefits of restoring competition lost in the acquisition and reducing 
the possibility that the value of the assets will be diminished. 
Section IV.A of the proposed Final Judgment requires the Defendants to 
divest the Divestiture Assets within forty-five (45) calendar days 
after the filing of the Complaint in this matter, or five (5) calendar 
days after notice of the entry of this Final Judgment by the Court, 
whichever is later.\*1\ Section IV.H requires that the Divestiture 
Assets be divested in such a way as to satisfy the United States in its 
sole discretion that the Divestiture Assets will remain viable and can 
and will be operated by the acquirer(s) as part of a viable, 
competitively-effective, ongoing higher education textbook publishing 
business and that the divestiture of such assets will remedy the 
competitive harm alleged in the Complaint.
---------------------------------------------------------------------------

    \*1\ The proposed Final Judgment also provides that this time 
period may be extended by the United States in its sole discretion 
for a period not to exceed thirty (30) calendar days, and that the 
Court will receive notice of any such extension.
---------------------------------------------------------------------------

    Sections IV.B, IV.C, IV.D, and IV.E include specific obligations 
and prohibitions that require the Defendants to cooperate with 
prospective acquirer(s) and facilitate the divestitures. Similarly, 
section IV.F requires the Defendants to use their best efforts to 
facilitate the assignment to the acquirer(s) of all assets included in 
the Divestiture Assets that Defendants hold or use pursuant to a 
license or any other agreement.
    Section V.G creates a limited exception to the Defendants' 
obligation to divest the Divestiture Assets in their entirety by 
allowing Cengage to retain a nonexclusive license to certain 
intellectual property that is used jointly in divested textbooks and 
textbooks that are not being divested. Cengage has the right to obtain 
a one-year license to continue to include content written by an author 
on Appendix A in certain customized publications that are not required 
to be divested and to continue to sell for use with textbooks that will 
not be divested ancillary educational materials that are primarily, but 
not exclusively, used with the divested textbooks. This license is 
intended to allow Cengage a sufficient period of time to continue its 
limited use of the divested content while it develops substitute 
content. Cengage also has the right to a license to continue using any 
copyrighted art, charts or similar content that has been included in 
both divested textbooks and textbooks that will not be divested, other 
than content attributable to the authors of the divested textbooks. 
Cengage may continue to use this content in all existing and future 
textbooks and ancillary materials, except that Cengage must obtain the 
consent of the acquirer(s) to use the content in future textbooks or 
ancillary materials that will compete with the divested textbooks and 
ancillary materials.
    Section V.A of the proposed Final Judgment provides that in the 
event the Defendants do not accomplish the divestitures within the 
periods prescribed in section IV.A of the proposed Final Judgment, the 
Court will appoint a trustee selected by the United States to effect 
the divestitures. Section IV.H requires that any sale of the 
Divestiture Assets by a trustee be acceptable to the United States, in 
its sole discretion, and specifies that any divestiture by a trustee 
must satisfy the same criteria that a divestiture by Defendants must 
satisfy. Section V.B provides that, after a trustee is appointed, only 
the trustee will have the right to sell the Divestiture Assets, and 
section V.C precludes Defendants from objecting to a sale by the 
trustee on any ground other than the trustee's malfeasance. Section V.E 
requires Defendants to use their best efforts to assist the trustee in 
accomplishing the divestitures.
    If a trustee is appointed, section V.D provides that Defendants 
will pay all costs and expenses of the trustee. The trustee's 
commission will be structured so as to provide an incentive for the 
trustee based on the price obtained and the speed with which the 
divestitures are accomplished. After his or her appointment, section 
V.F requires the trustee to file monthly reports with the Court and the 
United States setting forth his or her efforts to accomplish the 
required divestitures. Section V.G requires that, if the required 
divestitures have not been accomplished within six (6) months after a 
trustee's appointment, the trustee and the United States will both make 
recommendations to the Court, which shall enter such orders as 
appropriate to carry out the purpose of the Final Judgment, which may 
include extending the trust or the term of the trustee's appointment.

C. The Asset Preservation Stipulation and Order

    To ensure that the Divestiture Assets will be preserved, 
maintained, marketed, and further developed, and continue to be 
operated as economically viable and ongoing business properties,

[[Page 34959]]

until the divestitures required by the proposed Final Judgement have 
been accomplished, the United States and Defendants have agreed that 
the Court may enter the APSO that was filed simultaneously with the 
proposed Final Judgment.
    Sections V.A and V.B of the APSO provide that Defendants are 
required to preserve and maintain the value and goodwill of the 
Divestiture Assets. Prior to the completion of the divestitures, 
Defendants must maintain and increase the sales and revenues of the 
Divestiture Asset-related products and services, and maintain all 
operational, promotional, developmental, advertising, sales, technical, 
customer-service and marketing funding and other support for the 
Divestiture Assets. Defendants must also ensure that the Divestiture 
Assets arc fully maintained in operable and saleable condition and 
continue to be developed and updated, and maintain and adhere to normal 
sales, development, updating, and support schedules for the Divestiture 
Assets. Section V.C requires the Defendants to provide sufficient 
capital to maintain the Divestiture Assets and to maintain the 
Divestiture Assets as economically viable, competitive, and ongoing 
business properties. Section V.D prevents the Defendants from 
transferring or otherwise disposing of the Divestiture Assets.
    These asset preservation obligations should suffice to preserve 
competition during the brief 45-day period between consummation of the 
acquisition and completion of the required divestitures. Defendants 
will be required to continue their ongoing efforts--which have in part 
been stimulated by competition between them--to make improvements to 
the textbooks to be divested, and to maintain or increase the sales of 
those books. Moreover, the period between consummation and divestiture 
is likely to occur during the summer months when instructors do not 
typically select textbooks for their courses, and thus when competitive 
sales efforts are less meaningful.
    Section VI of the APSO requires the Defendants to appoint a person 
or persons to oversee the implementation of Defendants' obligations 
under the proposed Final Judgment and the APSO. The appointed person(s) 
will be responsible for ensuring Defendants' compliance with the asset 
preservation requirements specified in section V of the APSO, will have 
complete managerial responsibility for the Divestiture Assets, and will 
have authority to direct and implement all steps necessary to ensure 
Defendants' full compliance with section V. Any person(s) appointed to 
oversee the Divestiture Assets must receive a compensation package that 
provides a significant incentive to increase sales of the Divestiture 
Assets.

IV. Remedies Available to Potential Private Litigants

    Section 4 of the Clayton Act, 15 U.S.C. 15, provides that any 
person who has been injured as a result of conduct prohibited by the 
antitrust laws may bring suit in federal court to recover three times 
the damages the person has suffered, as well as costs and reasonable 
attorneys' fees. Entry of the proposed Final Judgment will neither 
impair nor assist the bringing of any private antitrust damage action. 
Under the provisions of section 5(a) of the Clayton Act, 15 U.S.C. 
16(a), the proposed Final Judgment has no prima facie effect in any 
subsequent private lawsuit that may be brought against Defendants.

V. Procedures Available for Modification of the Proposed Final Judgment

    The United States and Defendants have stipulated that the proposed 
Final Judgment may be entered by the Court after compliance with the 
provisions of the APPA, provided that the United States has not 
withdrawn its consent. The APPA conditions entry upon the Court's 
determination that the proposed Final Judgment is in the public 
interest.
    The APPA provides a period of at least sixty (60) days preceding 
the effective date of the proposed Final Judgment within which any 
person may submit to the United States written comments regarding the 
proposed Final Judgment. Any person who wishes to comment should do so 
within sixty (60) days of the date of publication of this Competitive 
Impact Statement in the Federal Register, or the last date of 
publication in a newspaper of a summary of this Competitive Impact 
Statement, whichever is later. All comments received during this period 
will be considered by the United States Department of Justice, which 
remains free to withdraw its consent to the proposed Final Judgment at 
any time prior to the Court's entry of judgment. The comments and the 
response of the United States will be filed with the Court and 
published in the Federal Register.
    Written comments should be submitted to: James J. Tierney, Chief, 
Networks & Technology Enforcement Section, Antitrust Division, United 
States Department of Justice, 600 E Street, NW., Suite 9500, 
Washington, DC 20530.
    The proposed Final Judgment provides that the Court retains 
jurisdiction over this action, and the parties may apply to the Court 
for any order necessary or appropriate for the modification, 
interpretation, or enforcement of the Final Judgment.

VI. Alternatives to the Proposed Final Judgment

    The United States considered, as an alternative to the proposed 
Final Judgment, a full trial on the merits against Defendants. The 
United States could have continued the litigation and sought 
preliminary and permanent injunctions against the proposed acquisition. 
The United States is satisfied, however, that the divestiture of assets 
described in the proposed Final Judgment will preserve competition in 
the development, publication and sale of textbooks and ancillary 
materials in the relevant markets alleged in the Complaint. Thus, the 
proposed Final Judgment would achieve all or substantially all of the 
relief the United States would have obtained through litigation, but 
avoids the time, expense, and uncertainty of a full trial on the merits 
of the Complaint.

VII. Standard of Review Under the APPA for the Proposed Final Judgment

    The Clayton Act, as amended by the APPA, requires that proposed 
consent judgments in antitrust cases brought by the United States be 
subject to a sixty-day comment period, after which the Court shall 
determine whether entry of the proposed Final Judgment ``is in the 
public interest.'' 15 U.S.C. 16(e)(1). In making that determination, 
the court, in accordance with the statute as amended in 2004, is 
required to consider:
    (A) The competitive impact of such judgment, including termination 
of alleged violations, provisions for enforcement and modification, 
duration of relief sought, anticipated effects of alternative remedies 
actually considered, whether its terms are ambiguous, and any other 
competitive considerations bearing upon the adequacy of such judgment 
that the court deems necessary to a determination of whether the 
consent judgment is in the public interest; and
    (B) The impact of entry of such judgment upon competition in the 
relevant market or markets, upon the public generally and individuals 
alleging specific injury from the violations set forth in the complaint 
including consideration of the public benefit, if any, to be derived 
from a determination of the issues at trial.
    15 U.S.C. 16(e)(1)(A) &; (B). In considering these statutory 
factors, the

[[Page 34960]]

court's inquiry is necessarily a limited one as the government is 
entitled to ``broad discretion to settle with the defendant within the 
reaches of the public interest.'' United States v. Microsoft Corp., 56 
F.3d 1448, 1461 (D.C. Cir. 1995); see generally United States v. SBC 
Commc'ns, Inc., 489 F. Supp. 2d 1 (D.D.C. 2007) (assessing public 
interest standard under the Tunney Act).\2\
---------------------------------------------------------------------------

    \2\ The 2004 amendments substituted ``shall'' for ``may'' in 
directing relevant factors for a court to consider and amended the 
list of factors to focus on competitive considerations and to 
address potentially ambiguous judgment terms. Compare 15 U.S.C. 
16(e) (2004), with 15 U.S.C. 16(e)(1) (2006); see also SBC Commc'ns, 
489 F.Supp. 2d at 11 (concluding that the 2004 amendments ``effected 
minimal changes'' to Tunney Act review).
---------------------------------------------------------------------------

    As the United States Court of Appeals for the District of Columbia 
Circuit has held, under the APPA, a court considers, among other 
things, the relationship between the remedy secured and the specific 
allegations set forth in the government's complaint, whether the decree 
is sufficiently clear, whether enforcement mechanisms are sufficient, 
and whether the decree may positively harm third parties. See 
Microsoft, 56 F.3d at 1458-62. With respect to the adequacy of the 
relief secured by the decree, a court may not ``engage in an 
unrestricted evaluation of what relief would best serve the public.'' 
United States v. BNS, Inc., 858 F.2d 456, 462 (9th Cir. 1988) (citing 
United States v. Bechtel Corp., 648 F.2d 660, 666 (9th Cir. 1981)); see 
also Microsoft, 56 F.3d at 1460-62; United States v. Alcoa, Inc., 152 
F.Supp. 2d 37, 40 (D.D.C. 2001). Courts have held that:

[t]he balancing of competing social and political interests affected 
by a proposed antitrust consent decree must be left, in the first 
instance, to the discretion of the Attorney General. The court's 
role in protecting the public interest is one of insuring that the 
government has not breached its duty to the public in consenting to 
the decree. The court is required to determine not whether a 
particular decree is the one that will best serve society, but 
whether the settlement is ``within the reaches of the public 
interest.'' More elaborate requirements might undermine the 
effectiveness of antitrust enforcement by consent decree.

    Bechtel, 648 F.2d at 666 (emphasis added) (citations omitted).\3\ 
In determining whether a proposed settlement is in the public interest, 
a district court ``must accord deference to the government's 
predictions about the efficacy of its remedies, and may not require 
that the remedies perfectly match the alleged violations.'' SBC 
Commc'ns, 489 F.Supp. 2d at 17; see also Microsoft, 56 F.3d at 1461 
(noting the need for courts to be ``deferential to the government's 
predictions as to the effect of the proposed remedies''); United States 
v. Archer-Daniels-Midland Co., 272 F.Supp. 2d 1, 6 (D.D.C. 2003) 
(noting that the court should grant due respect to the United States' 
prediction as to the effect of proposed remedies, its perception of the 
market structure, and its views of the nature of the case).
---------------------------------------------------------------------------

    \3\ Cf. BNS, 858 F.2d at 464 (holding that the court's 
``ultimate authority under the [APPA] is limited to approving or 
disapproving the consent decree''); United States v. Gillette Co., 
406 F.Supp. 713, 716 (D. Mass. 1975) (noting that, in this way, the 
court is constrained to ``look at the overall picture not 
hypercritically, nor with a microscope, but with an artist's 
reducing glass''). See generally Microsoft, 56 F.3d at 1461 
(discussing whether ``the remedies [obtained in the decree are] so 
inconsonant with the allegations charged as to fall outside of the 
`reaches of the public interest''').
---------------------------------------------------------------------------

    Courts have greater flexibility in approving proposed consent 
decrees than in crafting their own decrees following a finding of 
liability in a litigated matter. ``[A] proposed decree must be approved 
even if it falls short of the remedy the court would impose on its own, 
as long as it falls within the range of acceptability or is `within the 
reaches of public interest.' '' United States v. Am. Tel. &; Tel. Co., 
552 F.Supp. 131, 151 (D.D.C. 1982) (citations omitted) (quoting United 
States v. Gillette Co., 406 F.Supp. 713, 716 (D. Mass. 1975)), aff'd 
sub nom. Maryland v. United States, 460 U.S. 1001 (1983); see also 
United States v. Alcan Aluminum Ltd., 605 F.Supp. 619, 622 (W.D. Ky. 
1985) (approving the consent decree even though the court would have 
imposed a greater remedy). To meet this standard, the United States 
``need only provide a factual basis for concluding that the settlements 
are reasonably adequate remedies for the alleged harms.'' SBC Commc'ns, 
489 F. Supp. 2d at 17.
    Moreover, the court's role under the APPA is limited to reviewing 
the remedy in relationship to the violations that the United States has 
alleged in its Complaint, and does not authorize the court to 
``construct [its] own hypothetical case and then evaluate the decree 
against that case.'' Microsoft, 56 F.3d at 1459. Because the ``court's 
authority to review the decree depends entirely on the government's 
exercising its prosecutorial discretion by bringing a case in the first 
place,'' it follows that ``the court is only authorized to review the 
decree itself,'' and not to ``effectively redraft the complaint'' to 
inquire into other matters that the United States did not pursue. Id. 
at 1459-60. As this Court recently confirmed in SBC Communications, 
courts ``cannot look beyond the complaint in making the public interest 
determination unless the complaint is drafted so narrowly as to make a 
mockery of judicial power.'' SBC Commc'ns, 489 F.Supp. 2d at 15.
    In its 2004 amendments, Congress made clear its intent to preserve 
the practical benefits of utilizing consent decrees in antitrust 
enforcement, adding the unambiguous instruction that ``[n]othing in 
this section shall be construed to require the court to conduct an 
evidentiary hearing or to require the court to permit anyone to 
intervene.'' 15 U.S.C. 16(e)(2). The language wrote into the statute 
what Congress intended when it enacted the Tunney Act in 1974, as 
Senator Tunney explained: ``[t]he court is nowhere compelled to go to 
trial or to engage in extended proceedings which might have the effect 
of vitiating the benefits of prompt and less costly settlement through 
the consent decree process.'' 119 Cong. Rec. 24,598 (1973) (statement 
of Senator Tunney). Rather, the procedure for the public interest 
determination is left to the discretion of the court, with the 
recognition that the court's ``scope of review remains sharply 
proscribed by precedent and the nature of Tunney Act proceedings.'' SBC 
Commc'ns, 489 F.Supp. 2d at 11.\4\
---------------------------------------------------------------------------

    \4\ See United States v. Enova Corp., 107 F.Supp. 2d 10, 17 
(D.D.C. 2000) (noting that the ``Tunney Act expressly allows the 
court to make its public interest determination on the basis of the 
competitive impact statement and response to comments alone''); 
United States v. Mid-Am. Dairymen, Inc., 1977-1 Trade Cas. (CCH) ] 
61,508, at 71,980 (W.D. Mo. 1977) (``Absent a showing of corrupt 
failure of the government to discharge its duty, the Court, in 
making its public interest finding, should * * * carefully consider 
the explanations of the government in the competitive impact 
statement and its responses to comments in order to determine 
whether those explanations are reasonable under the 
circumstances.''); S. Rep. No. 93-298, 93d Cong., 1st Sess., at 6 
(1973) (``Where the public interest can be meaningfully evaluated 
simply on the basis of briefs and oral arguments, that is the 
approach that should be utilized.'').
---------------------------------------------------------------------------

VIII. Determinative Documents

    There are no determinative materials or documents within the 
meaning of the APPA that were considered by the United States in 
formulating the proposed Final Judgment.
Dated: May 28, 2008.

Respectfully submitted,

Jane J. Brody, Justine K. Donahue (DC Bar 476255), Aaron 
Comenetz (DC Bar 479572), John C. Filippini (DC Bar 
165159), Kent Brown, Aaron Brodsky.
Attorneys, Networks &; Technology Enforcement Section, Antitrust 
Division, United States Department of

[[Page 34961]]

Justice, 600 E Street, NW., Suite 9500, Washington, DC 20530, (202) 
307-6200.

Appendix A

 
------------------------------------------------------------------------
                 Course                             Textbooks
------------------------------------------------------------------------
Business: Introductory.................  All textbooks that relate to
                                          the study of introduction to
                                          business with which Louis
                                          Boone has been or will be
                                          associated, and all textbooks
                                          that relate to the study of
                                          introduction to business with
                                          which David Kurtz has been or
                                          will be associated.
Foreign Languages and Literature:        All textbooks with which Jean-
 French: Language: Business French.       Luc Penfornis has been or will
                                          be associated.
Foreign Languages and Literature:        All textbooks that relate to
 French: Language: Intermediate.          the study of French language
                                          or literature at the
                                          intermediate level with which
                                          Michael Oates has been or will
                                          be associated, all textbooks
                                          with which Jacques Dubois has
                                          been or will be associated,
                                          all textbooks with which
                                          Simone Renaud has been or will
                                          be associated, all textbooks
                                          with which Dominique Van Hooff
                                          has been or will be
                                          associated, all textbooks that
                                          relate to the study of French
                                          language or literature at the
                                          intermediate level with which
                                          Jean-Paul Valette has been or
                                          will be associated, and all
                                          textbooks that relate to the
                                          study of French language or
                                          literature at the intermediate
                                          level with which Rebecca
                                          Valette has been or will be
                                          associated.
Foreign Languages and Literature:        All textbooks with which
 German: Language: Grammar.               Kimberly Sparks has been or
                                          will be associated, and all
                                          textbooks with which Van Horn
                                          Vail has been or will be
                                          associated.
Foreign Languages and Literature:        All textbooks with which Marcel
 Italian: Language: Elementary.           Danesi has been or will be
                                          associated, and all textbooks
                                          with which Suzanne Branciforte
                                          has been or will be
                                          associated.
Foreign Languages and Literature:        All textbooks with which Marcel
 Italian: Language: Intermediate.         Danesi has been or will be
                                          associated, and all textbooks
                                          with which Francesca Italiano
                                          has been or will be
                                          associated.
History: Western Civilization Survey:    All textbooks with which John
 1500 to Present.                         McKay has been or will be
                                          associated.
History: Western Civilization Survey:    All textbooks with which John
 1750 to Present.                         McKay has been or will be
                                          associated.
History: Western Civilization Survey:    All textbooks with which John
 Prehistory to 1715.                      McKay has been or will be
                                          associated.
History: Western Civilization Survey:    All textbooks with which John
 Prehistory to Present.                   McKay has been or will be
                                          associated.
History: World History Survey: 1400 to   All textbooks with which John
 1750.                                    McKay has been or will be
                                          associated.
History: World History Survey: 1500 to   All textbooks with which John
 Present.                                 McKay has been or will be
                                          associated.
History: World History Survey:           All textbooks with which John
 Prehistory to Present.                   McKay has been or will be
                                          associated.
Interdisciplinary Studies: Orientation   All textbooks with which John
 to College.                              Gardner has been or will be
                                          associated.
------------------------------------------------------------------------

 [FR Doc. E8-13029 Filed 6-18-08; 8:45 am]
BILLING CODE 4410-11-M