The US Department of Justice (DoJ) has blocked the proposed US$8bn merger between Quad Graphics and what was the volume printing arm of former rival RR Donnelly, now known as LSC Commuinications.
The proposed deal would have created the largest printer in the US, and possibly the world, with the $8bn print sales roughly the same as the entire value of Australian print. LSC alone has sales of US$3.9bn, with 22,000 staff operating in 46 print factories.
Announced in October last year, the deal would have left the US with one major heatset printer, and it is this scenario that has caused the government to step in, with its lawyers now issuing various writs under anti-trust legislaiton.
The DoJ said it believed the merger if allowed would give too much power to the company, and result in higher prices and lower quality for book, magazine and catalogue publishers, ultimately resulting in a poorer outcome for the US public.
The owners of Quad Graphics, the Quadracci family, disputes the outcome, saying that the combined company would have been responsible for less than five per cent of all US print, saying there are other alternatives for publishers, and arguing that it wasn't just in the print industry, it was competing with the digital giants Facebook, Amazon and Google for marketing spend.
If the deal fails to get over the line, Quad will have to pay LSC some US$45m.