Tribune Publishing announced Thursday it won a bankruptcy auction for the Orange County Register, but US antitrust authorities swiftly responded with a lawsuit seeking to block the deal.
The bid, if approved, would give the Los Angeles Times owner a dominant position in newspapers for a large area of Southern California.
Tribune Publishing, which owns a group of 11 metropolitan dailies that includes the Chicago Tribune and Baltimore Sun, said it agreed to pay $56 million for the assets of Freedom Communications.
That would give Tribune -- the publishing unit broken off the larger Tribune Co. conglomerate in 2014 -- the Orange County Register and the Press-Enterprise, along with real estate assets.
The Justice Department within hours of the announcement said it filed a civil antitrust lawsuit seeking to block the takeover.
The complaint said the Los Angeles Times and the Register together account for 98 percent of newspaper sales in Orange County and that the Times and Freedom's newspapers together account for 81 percent of English-language newspaper sales in Riverside County.
This would be an effective monopoly allowing the company to increase subscription prices, raise advertising rates and invest less to maintain the quality of its newspapers, according to the lawsuit.
"If this acquisition is allowed to proceed, newspaper competition will be eliminated and readers and advertisers in Orange (LSE: 0OQV.L - news) and Riverside Counties will suffer," said Assistant Attorney General Bill Baer of the Justice Department.
"Newspapers continue to play an important role in the dissemination of news and information to readers and remain an important vehicle for advertisers. The antitrust division is committed to ensuring that competition in this important industry is protected."
Justin Dearborn, chief executive of Tribune Publishing, said in a statement earlier in the day that the tie-up "will allow the Orange County Register and the Press-Enterprise to continue providing a distinct local voice in their communities and deliver premium news and information to consumers across Southern California."
The bid must be approved at a bankruptcy court hearing scheduled for March 21.
An investor group led by Freedom Communications CEO Rich Mirman left the bidding after all-day negotiations stalled, according to the Orange County Register.
Digital First Media, publisher of the Los Angeles Daily News and Long Beach Press-Telegram, was also interested.
Freedom filed for bankruptcy last year after a failed effort led by investor Aaron Kushner, who bought the group in 2012 and invested heavily in print, defying the trend toward digital media.