DOJ files suit to block merger between publishing giants

by mcardinal

Chris Lange, FISM News


The Department of Justice on Tuesday filed a major antitrust lawsuit aimed at blocking a proposed merger between America’s largest book publisher and one of its competitors.

Attorney General Merrick Garland said the suit aimed at preventing publishing powerhouse Penguin Random House from purchasing competitor Simon & Schuster was filed to prevent “outsized influence” over what Americans read and maintain fairness and competition in the publishing industry.

“Books have shaped American public life throughout our nation’s history, and authors are the lifeblood of book publishing in America. But just five publishers control the U.S. publishing industry,” Garland said in a statement, adding “If the world’s largest book publisher is permitted to acquire one of its biggest rivals, it will have unprecedented control over this important industry. American authors and consumers will pay the price of this anticompetitive merger – lower advances for authors and ultimately fewer books and less variety for consumers.”

The merger would allow Penguin Random House owner Bertelsmann, a German media group, to purchase Simon & Schuster from its parent company, ViacomCBS, for $2.175 billion. It would also allow Penguin to bring best-selling writers Stephen King, Anthony Doerr, and Bob Woodward into its fold of authors.  

According to the DOJ complaint, should the merger go forward, Penguin Random House would gain almost half of the market for publishing rights to major books, effectively eliminating competition from publishers less than half its size, and give Penguin revenues doubling that of their competitors. The suit also argues that the merger would harm “authors of anticipated top-selling books” by limiting “higher advances, better services, and more favorable contract terms for authors.”

“By reducing author pay, this merger would make it harder for authors to earn a living by writing books, which would, in turn, lead to a reduction in the quantity and variety of books published,” the DOJ said in the complaint.

The publishers refuted the claim in a joint statement, saying that “Blocking the transaction would harm the very authors DOJ purports to protect.” They also point out that the complaint did not contain any allegations that the deal would hinder competition for book sales. 

Penguin has hired high-profile attorney Daniel Petrocelli to defend the merger in court. Petrocelli successfully defended AT&T’s acquisition of Time Warner in 2018 against a similar lawsuit filed by the DOJ under President Trump seeking to block the merger.

“We will fight this lawsuit vigorously and look forward to PRH serving as the steward for this storied publishing house in the years to come,” they said. 

The suit marks the largest antitrust case to date under the Biden administration. Biden’s nominee to head up the Justice Department’s antitrust division, Jonathan Kanter, meanwhile, is currently awaiting Senate confirmation.