A US judge has blocked the planned $2.2 billion merger of Penguin Random House, the world’s largest book publisher, with rival Simon & Schuster.
Judge Florence Pan of the U.S. District Court for the District of Columbia said in a brief injunction Monday that she had determined that the Justice Department had shown the deal would “significantly harm competition” in the market for the U.S. publishing rights to provide. in bestselling books”.
Unlike most merger battles, which focus on what consumers pay, this one focused on authors’ earnings. The U.S. government argued that fewer publishers competing with each other would lead to lower advances for authors across the board, but targeted a small segment of the market: top-selling writers getting $250,000 or more.
The government identified best-selling titles that had been the subject of bidding wars between PRH and Simon & Schuster, arguing that competition had pushed up what the author was paid.
The top five publishers control 90% of the market. A combined PRH and Simon & Schuster would control 49% of the blockbuster book market, while its closest competitors would be less than half its size.
PRH and Simon & Schuster executives argued that bidding wars between the two companies were rare, claiming the merger would benefit writers’ payments as it would lead to savings and allow them to spend more on books.
PRH writers include cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster publishes Stephen King, Jennifer Weiner, and Hillary Clinton, among others.
The news is a major victory for the Biden administration, which has sought to tighten enforcement of antitrust laws. Justice argued that the merger would “excessively affect which books are published in the United States and how many authors are paid for their work”.
Penguin Random House attorney Daniel Petrocelli, who defeated the government in a previous merger challenge, argued at trial that the deal would have “huge benefits” for readers and authors alike, as the imprints, or brands, owned by the two giants, would continue to exist. fight against each other.
King, author of numerous bestsellers including It, The Stand and The Shining, was among some of the best-selling authors and agents to testify during the three-week trial. He disagreed with arguments that the merger would bring “huge benefits”.
‘You might as well say that your husband and wife are bidding against each other for the same house. It’s a bit ridiculous,” King told the court. “Consolidation is bad for the competition.”
On Monday, King told the New York Times that he was “happy with the result.”
“Further consolidation would have done slow but steady damage to writers, readers, independent booksellers and small publishers,” he said. “Publishing should focus more on cultural growth and literary achievement and less on corporate balance sheets.”
Penguin is owned by the German media group Bertelsmann, while Paramount Global is owned by Simon & Schuster.
In a statement, Penguin Random House called the decision “an unfortunate setback for readers and authors” and argued that the Justice Department’s “focus on progress for the world’s highest-paid authors rather than consumers or the intense competitiveness in the publishing industry in conflicts with its mission to ensure fair competition”.
Reuters contributed to this story