U.S. Justice Department Sues to Block Penguin Random House from Purchasing Simon & Schuster

The United States Justice Department sued Penguin Random House on Nov. 2 to stop it from purchasing rival publisher Simon & Schuster, arguing that the merge “would likely harm competition in the publishing industry.”

In a complaint filed in the U.S. District Court for the District of Columbia, the Justice Department alleged that the proposed $2.175 billion deal to merge the two publishers would eliminate the competition, resulting in “substantial” harm to authors and ultimately, consumers.

Penguin Random House and Simon & Schuster are two of the so-called “Big Five” publishers in the U.S.

The lawsuit also named Bertelsmann and ViacomCBS, the respective parent companies of Penguin Random House and Simon & Schuster, as defendants.

“This acquisition would enable Penguin Random House, which is already the largest book publisher in the world, to exert outsized influence over which books are published in the United States and how much authors are paid for their work,” the Justice Department said.

According to the complaint, the proposed merge would put Penguin Random House in control of close to half the market for acquiring publishing rights, which would leave hundreds of authors with fewer options and less leverage and consumers with less quantity and less variety of books.

“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.

The civil lawsuit is one of the first major antitrust actions taken by the administration of President Joe Biden.

In a joint statement, the publishers said they would fight the lawsuit “vigorously.”

“We are confident that the robust and competitive landscape that exists will ensure a decision that the acquisition will promote, not harm, competition,” Penguin Random House’s lead trial attorney Daniel Petrocelli said.

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