DOJ sues to dam merger of Penguin Random Home, Simon & Schuster

The Biden administration on Tuesday sued Penguin Random Home and Simon & Schuster to dam the 2 corporations from finishing a $2.175 billion merger that the administration stated “would doubtless hurt competitors within the publishing business.”

That lack of competitors would undermine authors’ energy to acquire advances and different providers essential for his or her books and careers, the Division of Justice’s Antitrust Division alleged in a civil lawsuit.

“If Defendants’ proposed merger is allowed to proceed, Penguin Random Home could be, by far, the biggest e-book writer in the US, towering over its rivals,” stated the authorized grievance, which was filed in federal court docket in Washington, D.C.

“The merger would give Penguin Random Home outsized affect over who and what’s revealed, and the way a lot authors are paid for his or her work,” the Justice Division alleged.

The DOJ lawsuit additionally named as defendants Bertelsmann and ViacomCBS, the respective father or mother corporations of Penguin Random Home and Simon & Schuster.

Viacom in November 2020 introduced the greater than $2 billion deal to promote Simon & Schuster to Penguin Random Home. With that buy, Bertelsmann’s media empire would develop to embody roughly one-third of all of the books bought within the U.S.

The 2 publishers vowed to “vigorously” struggle the lawsuit, contending in a joint assertion that the publishing business will nonetheless be “a vibrant and extremely aggressive atmosphere” after the merger.

“DOJ’s lawsuit is unsuitable on the details, the legislation, and public coverage,” Penguin Random Home’s lead trial lawyer Daniel Petrocelli stated within the assertion.

“Importantly, DOJ has not discovered, nor does it allege, that the mix will cut back competitors within the sale of books,” he stated.

The antitrust lawsuit notes that Penguin Random Home is already the world’s largest e-book writer, with Simon & Schuster at present the fourth-largest writer within the U.S.

“Collectively their U.S. revenues could be twice that of their subsequent closest competitor,” the DOJ stated.

If allowed to undergo, the company alleged, that shift would disrupt the present steadiness of competitors among the many “Massive 5” U.S. publishers, which along with the 2 defendants contains HarperCollins Publishers, Hachette E book Group and Macmillan Publishing Group.

“If consummated, this merger would doubtless lead to substantial hurt to authors of anticipated top-selling books and in the end, shoppers,” the DOJ’s lawsuit stated.

“Publish-merger, the 2 largest publishers would collectively management greater than two-thirds of this market, leaving a whole lot of authors with fewer options and fewer leverage.”

Simon & Schuster CEO Jonathan Karp, in a memo to employees shared with CNBC by a spokesman for the writer, stated he was “dedicated” to combating the lawsuit.

“For all of us, this information is unsettling: no one likes to work in an environment of uncertainty,” stated the memo from Karp, who lauded employees for his or her “potential to adapt beneath excessive circumstances” throughout the coronavirus pandemic.

“Simon & Schuster has modified possession seven instances over the course of our 97-year historical past, and all the time our authors and our books have remained our principal concern, curiosity, and fervour,” Karp’s memo stated.

That is creating information. Please verify again for updates.