The merger between Penguin Random and Simon & Schuster cannot go forward, a US judge has ruled. Photo: 123rf
By Diane Bartz
A planned $USD2.2 billion merger of Penguin Random House, the world's largest book publisher, and rival Simon & Schuster cannot go forward, a US judge ruled on Monday.
Unlike most merger fights, which were focused on what consumers pay, this one focused on authors' earnings.
The government argued the deal should be stopped because it would lead to less competition for blockbuster books and lower advances for authors who earn $250,000 or more.
Judge Florence Pan of the US District Court for the District of Columbia said in a brief order that she had found the Justice Department had shown the deal may substantially lessen competition "in the market for the US publishing rights to anticipated top-selling books."
Penguin writers included cookbook author Ina Garten and novelists Zadie Smith and Danielle Steele, while Simon & Schuster published Stephen King, Jennifer Weiner and Hillary Rodham Clinton, among others.
Penguin was owned by German media group Bertelsmann SE & Co while Paramount Global owns Simon & Schuster.
Neither the companies nor the Justice Department immediately responded to a request for comment.
The Us Justice Department had filed a lawsuit aimed at stopping the deal in November.
In hearings held in August, the government argued that the largest five publishers control 90 per cent of the market, and a combined Penguin and Simon & Schuster would control nearly half of the market for publishing rights to blockbuster books while its nearest competitors would be less than half its size.
Penguin Random House lawyer Daniel Petrocelli, who defeated the government in a previous merger challenge, argued during the trial that the deal would have "enormous benefits" for readers and authors alike since the imprints, or brands, owned by the two giants would continue to compete against each other.
Best-selling author Stephen King, who testified during the three-week trial, took issue with this pledge.
"You might as well say you're going to have a husband and wife bidding against each other for the same house. It's kind of ridiculous," King told the court.
The top five publishers were Penguin Random House, HarperCollins, Macmillan, Simon & Schuster and Hachette, with Walt Disney Co and Amazon.com Inc also in the market. HarperCollins was owned by News Corp.
Judge Pan was nominated to the US District Court for the District of Columbia by President Joe Biden, who then nominated her to the appeals court in Washington. She was confirmed in September.
- Reuters