US starts legal battle over publishing giants merger

The government and publishing titan Penguin Random House traded opening salvos in a federal antitrust lawsuit on Monday as the United States seeks to stop America’s biggest book publisher from taking over rival Simon & Schuster. The case is a key test of the Biden administration’s antitrust policy.

The Justice Department has filed a lawsuit to block the $2.2 billion merger, which would reduce the Big Five U.S. publishers to four.

The government’s star witness, best-selling author Stephen King, is set to testify in Tuesday’s session of the weeklong trial in US District Court in Washington, DC King’s work is published by Simon & Schuster.

In Monday’s opening session, opposing attorneys for both sides presented their cases before U.S. District Judge Florence Pan.

Lawyers for the Justice Department called the merger “allegedly bad” because it would lessen competition and, inevitably, the vital public discourse the books help engender. Penguin Random House countered that the new company would “strengthen” competition because the combined company could produce books more efficiently.

The government says it would hurt authors and ultimately readers if German media titan Bertelsmann, of which Penguin Random House is a division, were allowed to buy Simon & Schuster, the fourth-largest publisher, from the U.S. Paramount Global media and entertainment. . He says the deal would thwart competition and give Penguin Random House gigantic influence over books published in the United States, likely reducing authors’ salaries and giving consumers fewer books to choose from.

The publishers counter that the merger would increase competition between publishers to find and sell the hottest books, by allowing the merged company to offer larger upfront payments and marketing support to authors. This would benefit readers, booksellers and authors, they say.

Both New York-based publishers have impressive stables of best-selling authors, who have sold millions of copies and landed multimillion-dollar deals. Within the Penguin Random House constellation are Barack and Michelle Obama, whose memoir package totaled approximately $65 million, Bill Clinton, who received $15 million for his memoir, Toni Morrison, John Grisham and Dan Brown.

Simon & Schuster has Hillary Clinton, who received $8 million for her memoirs, Bob Woodward and Walter Isaacson. And King.

Bruce Springsteen splits the difference: his “Renegades: Born in the USA,” starring Barack Obama, was published by Penguin Random House; his memoirs, by Simon & Schuster.

The Department of Justice argues that as things stand, Penguin Random House No. 1 and Simon & Schuster No. 4, in terms of total sales, are in fierce competition for the publishing rights to the most popular books. sold. If allowed to merge, the merged company would control nearly 50% of the market for such books, according to the report, harming competition by reducing advances paid to authors and diminishing output, creativity and diversity.

The Big Five – the other three are Hachette, HarperCollins and Macmillan – dominate American publishing. They account for 90% of the best-selling book market, according to the government.

The Biden administration is breaking new ground in corporate concentration and competition, and the government’s case against publisher mergers is an important test.