Reed Elsevier set to acquire ChoicePoint, minus public records business

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Reed Elsevier Inc. has agreed to divest some of its ChoicePoint assets in order for its $4.1 billion acquisition of ChoicePoint Inc. to be approved by the FTC.


Earlier this week, the FTC issued a complaint that Reed's acquisition of ChoicePoint would be anticompetitive and violate antitrust laws. With Reed and ChoicePoint currently accounting for more than 80% of the $60 million market for the sale of electronic public records to the US law enforcement sector, the acquisition would eliminate the only substantial competition in that sector.


“[Reed Elsevier's] LexisNexis and ChoicePoint both have products that law enforcement customers from the Department of Justice and the FBI down to local sheriffs use,” explained Brendan McNamara, staff attorney for the FTC. “LexisNexis and ChoicePoint were the only two firms that had good products in this space, so that's why we challenged it.”


To alleviate the potential anticompetitive effects, the FTC is requiring Reed to sell off ChoicePoint's AutoTrackXP and Consolidated Lead Evaluation and Reporting (CLEAR) public records services to Thomson Reuters Legal Inc. The divestiture must occur within the first 15 days after Reed officially acquires ChoicePoint, and Reed is required to provide transitional services to Thomson Reuters Legal for up to two years after the transaction, to ensure that Thomson Reuters can effectively compete.


“They agreed to sell, so that competition that was occurring between LexisNexis and ChoicePoint prior will keep on,” McNamara noted. “In the law enforcement sector, Reed Elsevier will essentially be in the same marketplace position as they were before the deal was announced, when they had their own products competing against ChoicePoint.”


A statement from Reed Elsevier said the company's acquisition of ChoicePoint should be completed on September 19. Reed will retain ChoicePoint's data and analytics operations for the insurance sector, which make up 80% of ChoicePoint's operating income. The divested businesses made up 2% of ChoicePoint's 2007 revenues.


“The acquisition of ChoicePoint represents a major step in the building of a leading risk management business and in the development of Reed Elsevier's online workflow solutions strategy,” said Sir Crispin Davis, CEO of Reed Elsevier, in the statement. “The market growth in risk information and analytics is very attractive, and ChoicePoint brings important assets and market positions that fit well with our existing business and can be leveraged to very good effect.”


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