U.S. sued to block major merger of book publishers

The Justice Department filed suit to stop a $2.2 Billion book publishing deal. It claimed that consolidation would harm authors and readers.

German media firm Bertelsmann’s Penguin Random House is looking to purchase Simon & Schuster in New York, where Stephen King, Hillary Clinton, and John Irving are authors. This deal will be made through TV and film company ViacomCBS. ViacomCBS also owns CBS News. )

The Department of Justice brought an antitrust lawsuit before the U.S. District Court for the District of Columbia on Tuesday. This was the first antitrust case by the Biden Administration. It claimed that the agreement would allow Penguin Random House to “exert outsized control over the books published in the United States, and the amount authors receive for their work.” “

” If the largest publisher of books in the world is allowed to buy one of its most powerful rivals, this will give it unprecedented power over an important sector. American consumers and authors will be paying the cost of this anticompetitive merge – less advances for authors, fewer books for readers and ultimately, less choice for them,” stated Attorney General Merrick Garland.

The purchase of Simon & Schuster will reduce America’s so-called Big Five publishers, including HarperCollins and Macmillan to just four.

Concerns were expressed by writers as well as rival publishers. Authors Guild is a writer’s organization that opposed the deal because it would mean less competition for manuscripts. Rupert Murdoch’s News Corp (which owns HarperCollins) was reportedly interested in purchasing Simon & Schuster. Robert Thomson, the CEO of News Corp said that Bertelsmann “buying market dominance and being a book giant.” “

The publishers stated that they will fight the suit and would not block the deal for authors. Daniel Petrocelli of Penguin Random House, a lawyer, stated that “DOJ is incorrect on the facts and the law” in its lawsuit. Importantly, DOJ did not find, and does not allege that this combination would reduce the competition for the sale of books. “

Petrocelli is a prominent attorney who defended AT&T from the failed Justice Department attempt to stop its Time Warner acquisition under Trump.

The companies claim that they will still be competing for books in their respective publishing imprints after the deal is closed and that Penguin Random House does not intend to decrease the amount of books purchased or the prices paid.

The proposed purchase of Simon & Schuster by Penguin Random House follows years of consolidation within the publishing industry. In 2013., Penguin and Random House merged less then a decade ago. As publishers try to gain a better bargaining position from Amazon.com, the nation’s largest booksellers, acquisitions have increased in recent years.

“Today’s decision of the DOJ is unexpected, given the fact that so many major mergers or acquisitions in publishing have been through in recent years and for the past few decades without a raised eyebrow from DOJ,” Mary Rasenberger (CEO, Authors Guild) said in a Tuesday statement.

President Joe Biden called for more scrutiny of mergers in his efforts to boost competition and curb corporate power. To counter monopoly power, he has put together a group of regulators and advisors. He also appointed Lina Khan, a Big Tech critic to the Federal Trade Commission chair and Jonathan Kanter as head of DOJ’s Antitrust Division.

The Justice Department claims that if Penguin Random House bought Simon & Schuster it would have nearly half of the book-selling market. Because the companies could no longer be in competition for publishing rights, the government claims that authors would see less money. The government claims that lower author salaries would make it more difficult for authors to earn a living writing books. This could eventually lead to fewer books being published, as well as a smaller selection of books available for readers.

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