Justice Department seeks to block Quad’s acquisition
Sussex company says it will defend pending purchase of LSC Communications

By Katherine Michalets

June 21, 2019

SUSSEX — The Department of Justice filed a civil antitrust lawsuit Thursday to block Quad/Graphics, Inc. from acquiring LSC Communications Inc., which Quad said it will “vigorously defend.”

The Antitrust Division’s lawsuit alleges if it would go through, 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.”

Quad Chairman, President & CEO Joel Quadracci quickly issued a statement defending the pending acquisition.

“We believe the acquisition of LSC will result in time-and-cost-saving opportunities for clients while protecting jobs for employees. We also believe that the business combination will create a highly efficient print manufacturing and distribution platform that will strengthen the role of print in an increasingly multichannel media world that is dominated by digital advertising,” Quadracci said.

The DOJ filed its lawsuit in the U.S. District Court for the Northern District of Illinois.

“LSC is Quad’s primary competitor. If this deal were allowed to proceed, Quad would dominate the markets for magazine, catalog, and book printing services and be able to raise prices and reduce quality at the expense of publishers, retailers, and, ultimately, American consumers,” Assistant Attorney General Makan Delrahim of the Justice Department’s Antitrust Division in a statement.

Quadracci responded that the DOJ doesn’t acknowledge the “dynamic conditions” present in the U.S. commercial printing industry.

He said that the industry has about 50,000 companies and generates about $76 billion in aggregate annual revenues.

“Neither Quad nor LSC accounts for more than 5 percent of that total print industry revenue. By comparison, two digital media companies, Google and Facebook alone, have worldwide digital ad sale revenues totaling more than $75 billion — nearly the same amount as the entire printing industry,” Quadracci said.

The competition from other forms of media is another key point to be considered, Quadracci said.

Quad/Graphics Inc. is headquartered in Sussex and offers a variety of printing services, including magazine, catalog, and book printing, to publishers across the country. In 2018, Quad’s revenues were approximately $4.2 billion.

LSC Communications Inc. is a Delaware corporation headquartered in Chicago. In 2016, it was spun off from printing firm R.R. Donnelley and offers the same magazine, catalog, and book printing services as Quad. In 2018, LSC’s revenues were approximately $3.8 billion.