Opposition to McGraw Hill–Cengage Merger Grows Louder
The planned merger of two top college book publishers Cengage and McGraw-Hill Education is getting a stiff resistance from various quarters over fears of a rise in textbook cost.
The Association of Public and Land-grant Universities (APLU) on Tuesday penned a letter to Makan Delrahim, the assistant attorney general at Department of Justice Antitrust Division, raising concerns that the consolidation of two companies will “reduce competition, disincentivize innovation, and raise prices for students.”
The agreement to combine in an all-stock merger on equal terms was announced by McGraw-Hill and Cengage in early May. It is now subjected to regulatory approval and is expected to close by early 2020.
APLU anticipates negative consequences for students, families, and institutions if the deal goes ahead which could result in a monopoly with just two providers including Pearson collectively controlling about 80 percent of the market.
“Reduced competition stands to stifle innovation,” the letter read.
“But even less competition in the textbook market would reduce incentives for textbook providers to innovate in this space and create new products and services that meet the needs of an increasingly digitally- native student population. Such diminished innovation would also likely lead to higher costs.”
However, McGraw-Hill has said that post-merger it will work on reducing costs for the college students.
“The combined company will deliver even greater value to students and educators by expanding access to best-in-class content, enhancing learning experiences through proven digital platforms, strengthening its commitment to providing affordable options and delivering superior experience and value,” the company said.
According to the Federal Register notice, textbook costs have seen a great surge in the past decade, with 88 percent rise in 2006-2016. The average cost increased to $1,263 for four-year college students and $1,458 for two–year schools in 2016-2017.
In July, student leaders from more than 30 higher education institutions also wrote a joint letter to the Department of Justice raising apprehensions over the merger.