U.S. antitrust officials sued to block Penguin Random House’s deal to buy Simon & Schuster, saying the tie-up would give Penguin too much control over book publishing and how much authors are paid.
In a complaint filed in federal court in Washington, the Justice Department argued the deal would eliminate the competition between No. 1 Penguin, owned by Bertelsmann SE, and No. 4 Simon & Schuster, owned by ViacomCBS Inc., for authors’ publishing rights.
“The merger would give Penguin Random House outsized influence over who and what is published, and how much authors are paid for their work,” the government said in the complaint.
Bertelsmann agreed to buy Simon & Schuster from ViacomCBS for $2.18 billion last year, giving the company a much-larger role in the U.S. market. Rupert Murdoch’s News Corp., which owns publisher HarperCollins, had complained at the time that the tie-up raised “profound” competition issues for the industry.
The so-called Big Five of publishing include Hachette and Macmillan, in addition to Penguin, HarperCollins and Simon & Schuster.
The deal would give Penguin close to half of the market for the acquisition of publishing rights to “anticipated top-selling books,” the government said. Its next largest competitor would be less than half its size.
“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 anticompetitive merger — lower advances for authors and ultimately fewer books and less variety for consumers.”
