US files lawsuit to stop merger of publishing giants

The US Justice Department on Tuesday said it was suing to block a buyout that could reshape the industry in a less competitive way.

German media giant Bertelsmann's Penguin Random House — already the largest US publisher — wanted to buy New York-based Simon & Schuster.

What did the Justice Department say?

US authorities on Tuesday filed an antitrust lawsuit to block the $2.2 billion (€1.9 billion) publishing deal that it said would have hurt writers and, in the end, readers.

Penguin Random House is seeking to buy the New York-based publisher Simon & Schuster — a move that would trim the so-called "big five" of American publishing to just four.

In the first major antitrust action by the Biden administration, the Department of Justice said the deal would let Penguin Random House "exert outsized influence over which books are published in the United States and how much authors are paid for their work."

"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," said Attorney General Merrick Garland in a statement.

"American authors and consumers will pay the price of this anti-competitive merger — lower advances for authors and ultimately fewer books and less variety for consumers."

Who are the corporate players?

Penguin Random House is already the largest American publisher. Notable among those who have had books published with the company are Barack and Michelle Obama and John Grisham.

The giant wants to buy New York-based Simon & Schuster, whose authors include Stephen King, Hillary Clinton, and John Irving, from the television and film company ViacomCBS.

Five big publishers dominate the US market, including Simon & Schuster. Its purchase by Penguin Random House would reduce that number to four.

The other three are HarperCollins, the Hachette Book Group, and Macmillan.

Daniel Petrocelli, a lawyer for Penguin Random House said the publisher would fight the lawsuit, arguing that blocking the deal would actually harm authors.

Both companies involved say they will maintain their publishing imprints even after the deal and will continue to compete against one another for authors and books.

Penguin Random House said it was not planning to reduce the number of books acquired or the amounts paid for the book deals.

Penguin and Random House themselves merged less than a decade ago, in 2013. The number of acquisitions in the industry has intensified in recent years as publishers seek a stronger bargaining position with Amazon.com., the leading bookseller in the United States.

Authors and rivals slam deal

The Authors Guild, a writers' organization, has said it opposes the merger because there would be less competition for authors' manuscripts.

However, Mary Rasenberger, Guild CEO, expressed surprise at the lawsuit, saying that officials had been slow to intervene in the past.

"Today's decision by the DOJ was unexpected given that so many other major mergers and acquisitions in the publishing industry have gone through recently and over the last few decades with nary a raised eyebrow from DOJ,'' said Rasenberger.

Meanwhile, Rupert Murdoch's News Corp, which owns HarperCollins and which had reportedly also been interested in buying Simon & Schuster, also criticized the plan.

News Corp CEO Robert Thomson last year accused Bertelsmann of "buying market dominance as a book behemoth."

rc/jsi (AP, AFP)