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Houghton Mifflin Played Dirty, Buyer Says

MANHATTAN (CN) - Houghton Mifflin Harcourt saturated the international college textbook market by doubling its sales to international resellers before selling its textbook business to a competitor, severely damaging the buyer's business, Cengage Learning claims in Federal Court.

Cengage claims that before closing the sale, Houghton Mifflin saturated the international college textbook market with an "unprecedented" spike in sales to shady international buyers. The international companies had "known propensities to redistribute these textbooks back into the U.S. market through unauthorized distribution channels," according to the complaint.

Cengage says Houghton Mifflin's sales made it impossible for Cengage to sell to legitimate resellers in these "artificially saturated foreign markets." It also undermined Cengage's domestic business because the resellers flooded the U.S. market with re-imported textbooks, according to the complaint.

Cengage says that when it signed the asset purchase agreement, Boston-based Houghton Mifflin Harcourt agreed to not behave "outside the ordinary and normal course" of its college textbook business, and promised to indemnify Cengage for any losses that could arise from international sales.

Cengage seeks at least $20 million for breach of warranty, misrepresentation and bad faith. It is represented by James Rittinger of Satterlee Stephens Burke & Burke.

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