The U.S. Department of Justice has sued to block Penguin Random House’s proposed $2.18 billion acquisition of Simon and Schuster, saying the merger of two of the “Big Five” book publishing companies would harm authors and consumers.
In an antitrust complaint filed on Tuesday, the DOJ said the deal, if consummated, would enable Penguin Random House to control close to half of the market for the acquisition of publishing rights to anticipated best-sellers, resulting in lower advances for authors and ultimately fewer books and less variety for consumers.
The publishing industry paid authors more than $1 billion in advances last year but according to the complaint, publishers other than the Big Five “cannot regularly pay the high advances and provide the unique bundle of services needed to secure the publishing rights to anticipated top-selling books.”
Through Sept. 25, Penguin Random House, the largest publisher in the U.S., accounted for 21.2% of all print books sold in the U.S., while Simon & Schuster, the No. 4 publisher, accounted for 6.1%, according to NPD BookScan.
“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,” Attorney General Merrick Garland said in a news release.
The deal was announced in November 2020, with Penguin Random House CEO Markus Dohle saying it was not anticompetitive because “If you look at the book market, it is unconcentrated.”
Behind the recent wave of publisher consolidation is the belief that bigger houses have greater leverage with retailers, including Amazon, Lorraine Shanley, president of consulting firm Market Partners International, told The Wall Street Journal.
But the DOJ, which, under the Biden administration, has taken a more aggressive approach toward antitrust enforcement, said the merger would eliminate the head-to-head competition between publishers to “acquire manuscripts by offering higher advances, better services and more favorable contract terms to authors.”
The merger, the complaint said, would harm consumers by making 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.”
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