JUSTICE DEPARTMENT REQUIRES DIVESTITURES IN PEARSON’S ACQUISITION OF HARCOURT ASSESSMENT

On January 24, 2008 the DOJ announced that it will require Pearson Plc to divest assets relating to three clinical testing markets in order to proceed with Pearson’s proposed $950 million acquisition of Harcourt Assessment. The DOJ claimed that the deal would have resulted in higher prices to purchasers of clinical tests, including many school districts, and would likely have impaired the launch of a competitive new test for adult abnormal personality disorders. The products to be divested are clinical tests that are used by psychologists, speech-language pathologists, and clinicians to diagnose persons who have or are at risk of developing certain disorders or disabilities.
The DOJ concluded that the transaction would have eliminated competition between Pearson and Harcourt and likely would have led to higher prices and reduced innovation for adaptive behavior and speech and language clinical tests. The DOJ also concluded that the proposed merger would have prevented Harcourt’s planned entry as an independent competitor in the market for adult abnormal personality clinical tests.

Clinical tests are used by psychologists, speech-language pahtologists, and clinicians, among others, to test for and diagnose individuals with disorders or disabilities, as well as to identify individuals at risk for such disorders or disabilities. Publishers, including Pearson and Harcourt, develop, edit, standardize, norm-reference, market, and sell clinical tests for a wide range of disorders and disabilities.

Under the terms of the proposed settlement, Pearson and Harcourt must divest: Harcourt’s adaptive behavior clinical test, the Adaptive Behavior Assessment System; Harcourt’s adult abnormal personality clinical test, the Emotional Assessment System, which is under development; and in the speech and language clinical test market, either Pearson’s Comprehensive Assessment of Spoken Language and the Oral and Written Language Scales or Harcourt’s Clinical Evaluation of Language Fundamentals. Under the proposed settlement, the Antitrust Division must approve the buyer of each of the divested assets.

Andre Barlow
(202) 589-1834
abarlow@dbmlawgroup.com