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Justice Department Sues to Block Penguin Random House Acquisition of Simon & Schuster

Justice Department Sues to Block Penguin Random House Acquisition of Simon & Schuster
justice-department-sues-to-block-penguin-random-house-acquisition-of-simon-schuster Justice Department Sues to Block Penguin Random House Acquisition of Simon & Schuster
justice-department-sues-to-block-penguin-random-house-acquisition-of-simon-schuster Justice Department Sues to Block Penguin Random House Acquisition of Simon & Schuster

As Kelly reported last year, Penguin Random House is acquiring Simon & Schuster for $2.2 billion, consolidating the major publishing houses yet again, this time from the Big Five to the Big Four. Penguin Random House, formerly separate publishers Penguin and Random House, is the single largest publishing house in the United States; Simon & Schuster is the fourth largest, and the merger would create a megapublisher controlling one-third of publishing business and, one speculates, little duty to any but their biggest authors. With traditionally published authors already making so little money, it’s troubling to think that a single publisher could have so much control over what gets published and how much authors get paid.

The United States Department of Justice (DOJ) agrees with that speculation and has sued to prevent the acquisition/merger. While antitrust laws typically protect consumers from corporate monopolies — e.g. preventing a corporation such as Penguin Random House from setting book prices at unattainable highs — this lawsuit is to prevent a monospony, which is an economic market with only one buyer, and therefore seeks to protect authors specifically.

From the complaint filed today:

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 deal […] would likely harm competition in the publishing industry and should be blocked.

Authors are the lifeblood of book publishing. Without authors, there would be no stories; no poetry; no biographies; no written discourse on history, arts, culture, society, or politics.

Today, Penguin Random House and Simon & Schuster compete vigorously to acquire publishing rights from authors and provide publishing services to those authors. This competition has resulted in authors earning more for their publishing rights […] and receiving better editorial, marketing, and other services that are critical to the success of their books.

The full complaint can be read here.

This lawsuit is the public’s first insight into how the Biden administration will handle antitrust enforcement, something the Trump administration was very hands-off with — in 2017 and 2018 the DOJ did not open a single investigation, the longest gap in 50 years of antitrust laws.

In a joint statement, Penguin Random House and Simon & Schuster called the lawsuit “wrong on the facts,” and said the “transaction” was pro-author and the lawsuit would “harm the very authors DOJ purports to protect.” Penguin Random House has engaged Daniel Petrocelli to defend them in court. He is the attorney who defended AT&T and Time Warner when the DOJ sued to prevent their merger; he won that case.

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