Simon & Schuster display at the London Book Fair at Kensington Olympia on the 12th March 2019 in London.
Sam Mellish | In Pictures | Getty Images
The Biden administration on Tuesday sued Penguin Random House and Simon & Schuster to block the two companies from completing a $2.175 billion merger that the administration said “would likely harm competition in the publishing industry.”
That loss of competition would undermine authors’ power to obtain advances and other services crucial for their books and careers, the Department of Justice’s Antitrust Division alleged in a civil lawsuit.
“If Defendants’ proposed merger is allowed to proceed, Penguin Random House would be, by far, the largest book publisher in the United States, towering over its rivals,” said the legal complaint, which was filed in federal court in Washington, D.C.
“The merger would give Penguin Random House outsized influence over who and what is published, and how much authors are paid for their work,” the Justice Department alleged.
The DOJ lawsuit also named as defendants Bertelsmann and ViacomCBS, the respective parent companies of Penguin Random House and Simon & Schuster.
Viacom in November 2020 announced the more than $2 billion deal to sell Simon & Schuster to Penguin Random House. With that purchase, Bertelsmann’s media empire would grow to encompass roughly one-third of all the books sold in the U.S.
The two publishers vowed to “vigorously” fight the lawsuit, contending in a joint statement that the publishing industry will still be “a vibrant and highly competitive environment” after the merger.
“DOJ’s lawsuit is wrong on the facts, the law, and public policy,” Penguin Random House’s lead trial attorney Daniel Petrocelli said in the statement.
“Importantly, DOJ has not found, nor does it allege, that the combination will reduce competition in the sale of books,” he said.
The antitrust lawsuit notes that Penguin Random House is already the world’s largest book publisher, with Simon & Schuster currently the fourth-largest publisher in the U.S.
“Together their U.S. revenues would be twice that of their next closest competitor,” the DOJ said.
If allowed to go through, the agency alleged, that shift would disrupt the current balance of competition among the “Big Five” U.S. publishers, which in addition to the two defendants includes HarperCollins Publishers, Hachette Book Group and Macmillan Publishing Group.
Source: Department of Justice
“If consummated, this merger would likely result in substantial harm to authors of anticipated top-selling books and ultimately, consumers,” the DOJ’s lawsuit said.
“Post-merger, the two largest publishers would collectively control more than two-thirds of this market, leaving hundreds of authors with fewer alternatives and less leverage.”
This is developing news. Please check back for updates.
