JUNE 21 UPDATE: Quad says it will "vigorously defend" the proposed acquisition despite Justice's objections. It also said it won't predict when the court will issue a ruling. LSC, whose stock price started today down 19%, also expressed continued support for the deal.
"The combination of Quad and LSC—the two most significant magazine, catalog, and book printers in the United States—threatens to increase prices, reduce quality, and limit availability of printed material that millions of Americans rely on to receive and disseminate information and ideas," reads the first paragraph of Justice's complaint, filed in the U.S. District Court for the Northern District of Illinois.
The move is counter to Justice's usual laissez faire approach to mergers in the printing industry, which it had previously viewed as highly fragmented and therefore not subject to antitrust regulations. (There's No Such Thing as a Printing Industry explains that, in fact, printing is a collection of disparate marketplaces.)
Justice isn't even suggesting any divestitures or other moves that would make the combination of Quad (AKA Quad/Graphics) and LSC acceptable. Here's the conclusion of its filing:
The United States requests:
(a) that Quad’s proposed acquisition of LSC be adjudged to violate Section 7 of the Clayton Act, 15 U.S.C. § 18;
(b) that the Defendants be permanently enjoined and restrained from carrying out the proposed acquisition of LSC by Quad or any other transaction that would combine the two companies;
(c) that the United States be awarded costs of this action; and
(d) that the United States be awarded such other relief as the Court may deem just and proper.
Justice issued a press release that nicely summarizes its 40-page filing, including this statement, "The Antitrust Division’s lawsuit alleges that the transaction would combine the only two significant providers of magazine, catalog, and book printing services, denying publishers and retailers throughout the country the benefits of competition that has spurred lower prices, improved quality, and greater printing output."
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