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Department of Justice Opens Investigation of Blackboard’s Purchase of Angel Learning

Last week the U.S. Department of Justice opened an investigation into the impact of Blackboard’s purchase of rival Angel Learning on competition in the course-management market.

Blackboard filed a report Friday with the U.S. Securities and Exchange Commission, disclosing that the investigation is underway. “On Friday, May 22, 2009, the Company received a voluntary request for information from the U.S. Department of Justice relating to the Acquisition and its related impact on competition under applicable antitrust law,” said the filing, signed by Matthew Small, Blackboard’s chief legal officer.

Mr. Small issued a statement today arguing that the purchase of Angel Learning “was compliant with all applicable antitrust requirements.” He said the company is providing information to the department “on a voluntary basis.” In an earlier interview with The Chronicle, Mr. Small said the company did not anticipate that the Justice Department would contest the sale.

Gina Talamona, a spokesperson for the Justice Department, told The Chronicle “we are looking into it,” but she would not elaborate.

Just after the deal was announced, at least one college official complained to the Justice Department, arguing that the combined companies could pose a threat to competition. The official, Sicco Rood, instructional-technology administrator for Washington State University at Spokane, said today that three Justice Department officials interviewed him last Thursday about his concerns.

“They asked typical stuff, like ‘How big is your college?’ and ‘How many students do you have?’ and ‘How many products did we review?’ and why,” Mr. Rood said of the interview. “They wanted to know whether Moodle was a viable option,” he said, referring to the open-source course-management system. “I said it wasn’t yet because there was a lot of programming and customization required.”

Justice Department officials are calling competing course-management companies as well. Diane M. Lank, Desire2Learn’s general counsel, said she was interviewed, and she described the questions as general ones about the market. Glen Moriarty, chief executive officer of Scholar360, another company that makes course-management software, said he also has an interview scheduled.

Camelia C. Mazard, a partner at the Washington law firm Doyle, Barlow, & Mazard PLLC who specializes in anti-trust law, said Blackboard’s latest acquisition could raise enough concern to cause the Justice Department to undo the deal, though such moves are rare. “In my opinion this gives them a virtual monopoly in a narrow market,” Ms. Mazard said in an interview Wednesday.

Ms. Mazard said she felt the department should have blocked Blackboard’s purchase of WebCT in 2007, though the deal was allowed to proceed. “That was under the Bush Administration,” she said. “We have a new administration here that is looking at deals, we hope differently.” —Jeffrey R. Young

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